India Needs $2.2-Trillion Infrastructure Investment To Become $7 Trillion Economy By 2030: Report
According to Knight Frank, by increasing the private participation in infrastructure development, the government can redirect the expenditure towards other key segments of economic growth.
India will require an investment of $2.2 trillion for infrastructure development, to become a $7 trillion economy by 2030, according to the latest report by Knight Frank India. The real estate consultancy in its report 'India Infrastructure: Reviving Private Investments' on Thursday, stressed on the need for radical measures to encourage private participation in this area.
To achieve an economic size of $7 trillion by 2030, India’s economy is required to grow at a CAGR of 10.1% between 2024-2030, the report noted.
Knight Frank's report said that the central and state governments' heavy reliance on infrastructure investments could strain fiscal deficit targets.
Private participation in infrastructure development in India has decreased significantly, from $160 billion (46.4% of total investments) between 2009-13 to $39.2 billion (7.2%) between 2019-23, the report stated.
This shift has led to a larger share of government-led investments, potentially widening the fiscal deficit, it added.
"Strong impetus on infrastructural development and increased budgetary allocation by government has led to India's ranking in the Logistics Performance Index improve from 54 in 2014 to 38 in 2023," said Knight Frank India Chairman and Managing Director Shishir Baijal.
In the last few years, there has been aggressive push by the policy makers to significantly expand India's infrastructure, he said.
Baijal noted that this widens the scope for private players to actively participate in India's infrastructure development and economic growth.
"However, there are certain bottlenecks limiting this scope. Hence, radical measures are required to induce a higher allocation of private investments towards infrastructure development to balance fiscal prudence to the government's budget and bring inclusive and long-term sustainable economic growth in the country," he said.
Maintaining a controlled fiscal deficit is crucial for long-term economic stability and effective debt management. The report noted that the central government aims to reduce its gross fiscal deficit to below 4.5% by 2025.
Increasing Private Sector Participation
Increasing private sector participation in infrastructure development would help balance fiscal deficit targets, the report said.
According to Knight Frank, by increasing the private participation in infrastructure development, the government can redirect the expenditure towards other key segments of economic growth, such as public healthcare, strengthening human capital, debt payments, etc., which will support long-term growth of the economy.
On a sector-wise analysis, the report found out that renewable energy, data centres, roads and highways, warehousing and logistics have significant potential to attract private investments.
Supported by a rapid urbanisation and shifting demographics, the consultant said that sectors such as urban mass transit, airports, power distribution etc. hold massive investment opportunities.
