Push to pvt capex in infra via viability gap fund

New Delhi: The government will provide Rs11.11 lakh crore towards capital expenditure for 2024-25 and will introduce viability gap funding to spur private investment in infrastructure, Finance Minister Nirmala Sitharaman said on Tuesday. Presenting the Union Budget for financial year 2024-25, she said the government will endeavour to maintain strong fiscal support for infrastructure over the next five years, in conjunction with imperatives of other priorities and fiscal consolidation. “This year, I have provided Rs11,11,111 crore for capital expenditure. This would be 3.4 per cent of our GDP,” Sitharaman said.

The minister said the Union government will encourage states to provide support of similar scale for infrastructure, subject to their development priorities. “A provision of Rs1.5 lakh crore for long-term interest-free loans has been made this year also to support the States in their resource allocation,” she said. Sitharaman said investment in infrastructure by the private sector will be promoted through viability gap funding (VGF) and enabling policies and regulations. “A market-based financing framework will be brought out,” she said.

The Budget has also announced launching the fourth phase of the PM Gram Sadak Yojana in 25 rural habitations and providing assistance to Assam for flood management and related projects. The minister added that the significant investment that the central government has made over the yeaRsin building and improving infrastructure has had a strong multiplier effect on the economy. In the previous two yeaRsas well the government had to increase the capex for infrastructure development by over 30 per cent to do heavy lifting as private investment was muted. Post-Covid-19, the Budget has been laying special emphasis on capex. It has kick-started a dormant cycle for the economy. During 2020-21, the government earmarked Rs4.39 lakh crore which increased by 35 per cent to Rs5.54 lakh crore in the subsequent year. Another 35 per cent hike in capex was done in 2022-23 to Rs7.5 lakh crore which subsequently reached a high of Rs10 lakh crore, an increase of 37.4 per cent.