Infra Trailing? Will government spending accelerate?

In its most important economic agenda to lift the GDP growth, the government has majorly been focusing on infrastructure. Reports indicate that since FY20, the Centre has undertaken a CAPEX of Rs 21.26 trillion in order to boost private investment and consumption through the multiplier effect. This is 14.42 per cent of India’s Rs 147.36 trillion real GDP and 9 per cent of its Rs 236.65 trillion nominal GDP for FY22. The impact has been visible in the Q1FY23 numbers of infrastructure construction companies. Net profit margins have significantly improved over the pre-pandemic quarter of December 2019. And this is clearly reflecting in their bottom-lines.

The Centre has also outlined spending plans for FY23;it is believed that this will augur well for the construction companies.Sources indicate that the Centre has lined up a CAPEX of Rs 7,500 billion for the current fiscal. AboutRs 1,750.64 billion of the total allocation has been utilised in the April-June period, and reportedly a total of Rs 780 billion was spent in April itself.

The Centre’s masterplan also indicates a list of mega infrastructure projects. While the Gati Shakti is considered a huge step towards achieving India’s $5 trillion economic goal, to achieve this target, reports indicate that India would need five times more spending towards infrastructure development. CW team queries some industry bigwigs for their views on the pace at which infrastructure works is progressing and if government spending is accelerating projects at the desired pace.

Nalin Gupta, Managing Director, J Kumar Infra; SV Desai, Director and Senior Vice President - Infrastructure, L&T; Capt BVJK Sharma, CEO, Navi Mumbai International Airport; Devdutt Bose, Head-Marketing & Business Strategy-Port, Tata Consultancy Engineers and Shantanu Bhadkamkar, Managing Director, ATC Global Logistics, share their thoughts on opportunities, push from government spending, and stimulating the economy and creating more jobs.