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Higher Allocation For Infrastructure In Budget

The Railway ministry has got a 53% increase in capital expenditure allocation for developing stations, improving rail connectivity, rail electrification and also for executing Metro and Rapid Rail Transport Systems.

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Given the chatter online, it seemed like the whole country was tuning in this morning at 11am to watch the Finance Minister, Nirmala Sitharaman present her budget. The battering that our economy has taken in the past year is very real and has meant many people have faced real problems. In that sense, the budget was expected to deliver relief to the people. To an extent, I think the budget has hit punches in a couple of unexpected arenas.


One way to create employment in the country is by building or creating assets, whether they are roads, railways, ports, or even real estate. Identifying this, the Government has pushed for a stronger capital expenditure or a higher allocation to the Roads Ministry who got an increase of 32% in its outlay. Certain key National Highway projects were identified with an increased allocation to push the road development work. Roads may seem commonplace for people who live in cities, but the ripple effect they have on the economy cannot be underestimated. Constructing or even widening a highway, firstly employs a fair number of people from the unorganized sector. Secondly, a proper road provides connections, facilitating better trade and commerce. Thirdly, a proper highway invariably develops the areas around it. The Railway ministry has got a 53% increase in capital expenditure allocation for developing stations, improving rail connectivity, rail electrification and also for executing Metro and Rapid Rail Transport Systems.

Asset Monetization:

The other aspect that received focus was a way to increase revenue. Monetizing assets is one way for the Government to make money while providing quality services to the public at the same time. Airports from Tier II and Tier III cities, warehouses owned by NAFED and Central Warehousing Commission, railway assets, toll booths are the ones considered for this purpose. If the tender process is transparent and does not allow a cartel to operate, I think this can help in raising revenues for Railways, Airports Authority of India, NAFED/Central Warehousing Commission, and NHAI as the case may be. This revenue can be used to provide better services to their existing customers. We tend to forget the ripple effect of good infrastructure in Tier II and Tier III cities. A world class airport can increase tourism and bring in companies to set up their offices there. The possibilities are endless.

Water and Air:

I have to admit, I was very surprised by the attention given to water in the budget. It is heartening to note the focus on water treatment which can provide clean water to cities which face water shortage problems. Fecal sludge management can help reduce pollution of water bodies. I hope this is implemented across Tier II and Tier III cities as well, especially those near a water body.

The allocation for Clean Air is a little vague and I hope that amount is put to good use. I am more interested in the scrappage policy which will ensure old vehicles get off our roads which will lead to cleaner air. I am hopeful that there will be policies on construction dust which is a major issue in the country.

The Misses:

While this was a very interesting budget, there were definitely some huge misses. The Government missed a chance to tax cryptocurrency earnings which would have provided a way to earn significant revenue.

The allocation for encouraging Pharmaceutical growth in the country is a modest Rs. 100 crore. In that sense, I am not sure it is enough to encourage companies to manufacture APIs etc and reduce import dependence on China.

Overall, the Budget was very restrained. There were no runaway populist measures that would cost the Government heavily. I don’t know whether this was a calculated risk or a gamble. However, capital expenditure is good only when those projects begin on time, so, one can only hope the Government takes up this spending on a war footing.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Niyati Mavinkurve

Abhi and Niyu, Digital content creator

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