Investments in the infrastructure sector have a notable impact, with a gross domestic product multiplier of 2.45 in the year of capital expenditure and 3.14 in the following year, making it a pivotal driver of economic growth. These are the findings of the Crisil Infrastructure Yearbook for 2023. The Yearbook, released by Crisil, highlights the crucial role of infrastructure development in India’s economic growth.
According to data sourced from the government of India, infrastructure spending has a substantial ripple effect on the economy. With a gross domestic product multiplier of 2.45 in the year of capital expenditure and 3.14 in the following year, it is evident that investments in this sector are key to driving economic growth.
Over the past decade, India has experienced a transformational infrastructure buildout, driven by various schemes, policies, and regulatory reforms aimed at expediting implementation.
This impressive track record of progress paves the way for even more growth in the coming years. It is on this bedrock that India’s economy is expected to double in size over the next decade.
Projections indicate that infrastructure investments will nearly double by 2030, with an estimated expenditure of approximately Rs 66.7 lakh crore during the fiscals 2017-2023 and a staggering Rs 142.9 lakh crore from 2024-2030.
While the lion’s share of investments will come from the government, the private sector is increasingly focusing on the energy and transportation sectors.
What stands out in these projections is the remarkable rise in green investments, expected to reach around Rs 36.6 lakh crore, marking a five-fold growth compared to the fiscals 2017-2023.
Within this green investment, the renewable energy (RE) sector will see a significant infusion of around Rs 30.3 lakh crore, followed by Rs 6.3 lakh crore in the transportation sector.
The question of how to finance these green initiatives looms large, but the report suggests that green financing should take off relatively quickly, supported by market borrowings and non-bank sources.
Indian companies have primarily raised green bonds from abroad, a trend expected to continue with minor disruptions in the short term.
Between fiscal years 2024 and 2030, funding from green bonds and external borrowings by Indian companies is expected to increase 2.5 times the current level.
