Should go to bond mkts, not to banks for infra financing: Subhash Garg

While the government’s target is to grow the share of manufacturing in GDP from around 15 per cent now to 25 per cent, the sector hasn’t picked up in recent years.

By: ENS Economic Bureau | New Delhi | Published: December 13, 2017 1:10 am

A stepping-up of infrastructure creation and a sharper focus on digitisation will contribute more to India’s economic growth in coming years rather than the manufacturing and farm sectors, economic affairs secretary Subhash Garg said on Tuesday. The official added that the Centre’s budgetary investment in infrastructure will be raised from the current level of 2.5 per cent of the gross domestic product with the aid of innovative financing instruments.

“We need to get financing (of infrastructure) directly from people and bond markets, not banks,” Garg said at an event organised by CII here. Bank lending to infrastructure projects surged during 2010-13, but many projects turned out to be less robust, leading to a piling up of non-performing assets in the books of banks.

According an estimate by Vinayak Chatterjee, infrastructure expert, the country requires annual investments to the tune of Rs15 lakh crore, over half of which could possibly be met from public investments. Infrastructure-sector investment in the 2017-18 Budget is Rs 3.96 lakh crore.

While the government’s target is to grow the share of manufacturing in GDP from around 15 per cent now to 25 per cent, the sector hasn’t picked up in recent years. Several initiatives like the Make-in-India programme are yet to gather steam. Even labour-intensive manufacturing sectors like textiles and leather remain stagnant, unable to tap export prospects aggressively.

According to Garg, the government is committed to “devoting more and more of Budget on capex”. Currently, the Centre’s budget capex is around 1.8 per cent of GDP. In FY18, it would be spending Rs 3.1 lakh crore, which is nearly at the previous year’s level. FE

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