PM Narendra Modi must invest trillions of dollars on roads and other critical infrastructure projects if he is to pull the economy out of its slump, with at least half of it coming from provincial governments that are not in his control.
India will need to spend Rs 235 lakh crore ($3.3 trillion) on infrastructure over the coming decade to return economic growth rates to more than 7.5 per cent, according to CRISIL Infrastructure Advisor. “That means the Indian states will have to more than triple their contributions from the current decade,” it said.
"Unless states contribute nearly 50 per cent of infrastructure investments, India's build-out momentum could taper sharply. With private investments tepid in recent years, and fiscal limitations on central spending, states have been keeping public spending going. They will need to strengthen fiscal health and build institutional capacity to sustain far higher levels of capex," Sameer Bhatia, President, Crisil Infrastructure Advisory said.
States already account for 41 per cent of the overall infrastructure spending of Rs 77 lakh crore this decade, the rating agency said while releasing its Infrastructure Yearbook 2019. Unless the States contribute nearly 50 per cent of infrastructure investments, India’s build-out momentum could taper sharply.
"Infrastructure investments by states need to rise to Rs 110 lakh crore over the next decade (fiscal 2021-2030) - or 3.5 times an estimated Rs 32 lakh crore in the current decade - if India is to achieve its mammoth infrastructure buildout targets," Crisil said in a statement.