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Budget and Infrastructure 2018



The total expenditure for 2018-19 Union Budget, is estimated to be over Rs. 24.42 lakh crore. Wherein 24.45 per cent of the total expenditure i.e. Rs 5.97 lakh crore is allocated to the infrastructure sector alone. The Modi Government has always focused on Infrastructure as it is the backbone of the economy and development goals can only be met with the help of infrastructure growth to supplant it. Thus, Finance Minister Arun Jaitley announced an “all-time high allocation to rail and road sectors” since the sector is the “growth driver of the economy.”  Allocation for infrastructure has been increased by 20 per cent, giving a boost to the sector and ensuring continued funding of various initiatives in roads, railways, aviation and urban infrastructure. This is done to fuel the proposed initiatives of bullet trains, Bharatmala Pariyojna, Sagarmala.

 Development in Infrastructure

The Prime Minister personally reviews the targets and achievements in infrastructure sectors on a regular basis. Using online monitoring system of PRAGATI, projects worth Rs 9.46 lakh crore have been facilitated and fast tracked. Under the Smart Cities Mission, projects worth Rs 2,350 crore have been completed and projects worth 20,852 crores are under progress. A total of 99 cities have been selected under the mission with an outlay of Rs 2.04 lakh crore.

To promote tourism in the country, 10 prominent tourist sites will be developed into iconic tourism destinations. This will be done by following a holistic approach involving infrastructure and skill development, development of technology, attracting private investment, branding and marketing.

Allocation for the road sector has been increased to Rs 70,544 crore compared to Rs 60,671 crore in 2017-18. Around 35,000 km of road construction has been approved under the Phase-1 of the Bharatmala Pariyojana at an estimated cost of Rs 5.35 lakh crore. Under the scheme, national highways are to be built extensively across the country, increasing the connectivity to northern hilly areas and the north-eastern border areas. Digitization and adoption of technology, including cashless payments at toll booths to improve efficiency and transportation, are to be implemented along with fast tag system. Grants for strategic roads have been increased for completion of the construction of Rohtang Tunnel and the proposed construction of the Zozila Pass and Sela Pass Tunnels.

The total capital and development expenditure for the Railways has been pegged at Rs 1.48 lakh crore compared to Rs 1.31 lakh crore last year. This includes Rs 93,440 crore provided by the government. Rs 40,000 crore will be spent on upgrading the Mumbai railway system. There is also a plan to establish a Rs 160-kilometre rail line in Bengaluru, for which Rs 17,000 crore has been allocated. Around 18,000 km of line doubling and upgradation of entire rail network to broad gauge is planned, compared to the targeted 4000 kilometers that were targeted for commissioning in 2017-18. Further, electrification of railway lines, focusing on safety and modernization (CCTV and Wi-Fi for all stations and escalators for all station with a footfall of over 25,000) is proposed.

 Role of Private Investment

The ever-expanding infrastructure sector is responsible for competitiveness in the manufacturing sector, as is evident from the case study of the Chinese economy. In India, the projected investment according to the 12th Plan (2012-2017) was $1 trillion with projected investment of 48% from private sector. Even experts believe that private sector investment is key. Manish Agarwal, partner and Leader-Infrastructure at PwC India, said “other initiatives, outside the budget, to revive private sector play in these sectors will complement and further the impact of the budget allocations.”  However, several bottlenecks and challenges related to availability of bankable infrastructure projects along with land acquisition and environmental issues resulted in low private sector investment. According to a survey released prior to the budget, in the last two years, growth was driven mostly by private consumption and government spending. There are, however, early signs of a pick-up in private investment with gross fixed capital formation seen rising by 4.5 percent this year. The government hopes to continue supporting the investment cycle till private investment revives further.


Investments in excess of Rs 50 lakh crore (US$ 786.02 billion) are required in the country’s infrastructure to increase the growth of GDP and connect and integrate country’s transport network. Hence, the current budget allocation is in tune with this necessity. At the same time, we have to be critical of the allocation since only if the allocation converts into equal amounts of expenditure will it solve the purpose that was envisioned by the budget. Moreover, even though the sector requires huge amounts of cash flow to boost infrastructure development, it can’t rely on public investment alone. Optimal goals can be reached by enhanced Public Private Partnerships. Hence, the government should work towards increasing incentives for private players, in order to make them contribute towards infrastructure building. This can be done through smoother bureaucratic approvals, more rigid laws and ease of business.



  1. “Union Budget 2018: Jaitely gives infrastructure a push”, Bloomberg Quint <>
  2. “Summary of Budget 2018-19”, Press Information Bureau, Government of India, Ministry of Finance.
  3. IBEF Budget Highlights
  4. Estimated Total Expenditure FY 2018-19, Press Information Bureau, Government of India, Ministry of Finance.
  5. “Union Budget 2017’s impetus to infrastructure may not be enough to revive sector”, Financial Express.
  6. “Union Budget 2018: Full text of Arun Jaitely’s budget Speech”, LiveMint.

Kaainat Pundir, the author, is a Second Year B.A., LL.B. Student at Jindal Global Law School.

Featured image source: Financial Express

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