India To Spend Rs 143 Lakh Crore On Infrastructure Between FY24 And FY30, Over Double Against Last 7 Fiscals: CRISIL

Of the total amount, about Rs 36.6 lakh crore would be spent on green investments, indicating a five-time increase in expense in this sector compared to the amount spent during the 2017-2023 period.

India will spend almost Rs 143 lakh crore on infrastructure during the next seven fiscal years, between 2024 to 2030. This amount would be over double the Rs 67 lakh crore it spent on infrastructure during the last seven financial years starting 2017, rating agency Crisil said on Tuesday.

Out of the total amount, about Rs 36.6 lakh crore would be spent on green investments, indicating a five-time increase in expense in this sector compared to the amount spent during the 2017-2023 period, the agency said. Crisil, in it’s Infrastructure Yearbook 2023, noted that India’s infrastructure spending will increase to Rs 143 lakh crore by the end of the decade, starting from the fiscal year 2024, reported PTI. 

Crisil’s managing director and CEO, Amish Mehta, noted that the agency estimates India’s gross domestic product to grow at an average rate of 6.7 per cent during the 2030-31 fiscal year, transforming the nation as the fastest-expanding economy. 

He added that the analytics agency expects the nation’s per capita income to increase from the current $2,500 to $4,500 by FY31, enabling the creation of a middle-income country. This growth, Mehta stated, would be underpinned by all-round infrastructure development, with a keen focus on integrating sustainability.  

The ‘Infrastructure Yearbook’ notably includes a unique national index Crisil InfraInvex. Mehta added that the positive trend in the agency’s InfraInvex scores across sectors could be attributed to the policy interventions and a productive investment climate in the country. In the index, the roads and highways, power transmission, renewable energy, and ports sectors have achieved an overall score of more than 7, out of 10, which indicated the reforms and developments in the last few years, the agency head noted. 

Crisil further said that the next phase of infrastructure development would be led by a boost in the average ticket size of projects and a major number of mega-scale projects. Investors would be attracted to invest in infrastructure projects in various sectors due to the regular policy and framework interventions and focus on the timely completion of projects.

The agency further estimated that major sectors like roads and power would continue to remain important contributors, while relatively emerging sectors like EVs, solar, wind, and hydrogen, will gain momentum. 

The contribution of EVs to India’s total automobile sales is expected to touch 30 per cent by the end of this decade. Further, two-wheeler EVs are projected to surpass other segments in sales by 2028, while EV buses would be in demand by state transport entities, the agency stated. 

Crisil also underlined that the ownership cost, and acquisition cost, along with the availability of two and three-wheeler models would help EVs become popular in the near future. It noted that renewable energy’s contribution to total capacity is predicted to increase four times between now and the end of the decade. Solar energy is expected to account for half of the incremental non-fossil generation, and there is a dire need to tap into emerging technologies like floatovoltaics (floating solar), offshore wind technology, and green hydrogen. 

Notably, the hydrogen sector is expected to gain major investments, worth nearly Rs 1.5 lakh crore between FY24 and FY30, the agency said. This brings ahead the need for incentive schemes in the sector as the cost of producing green hydrogen is more than twice compared to that of fossil-based hydrogen. 

The rating agency stated that India’s first sovereign green bond would make the way for the development of the domestic bond market for green issuances. Investors have shown increasing interest in green assets over the last few years, as such Indian firms have ventured into the global markets seeking funding.