An estimated $2.2 trillion investment in infrastructure development is imperative to support India’s GDP expansion to $7 trillion by 2030.
According to a report by Knight Frank India, India’s economy must grow at a CAGR of 10.1 per cent between 2024 and 2030 to achieve a size of $7 trillion.
The investment opportunity for private participation in infrastructure development in India ranges between $103.2 billion to $324 billion.
“India stands at the cusp of a transformative era in infrastructure development. By harnessing the power of private investment, we can accelerate our journey towards achieving our ambitious economic growth targets,” said Rajeev Vijay, Executive Director-Government and Infrastructure Advisory, Knight Frank India.
The central government aims to reduce its gross fiscal deficit to below 4.5 per cent by 2025, and increasing private sector participation in infrastructure development would help balance fiscal deficit targets.
At an existing investment share composition of Centre (51.2 per cent), state (44.1 per cent), and private (4.7 per cent), the estimated gross fiscal deficit in 2030 will be 4.7 per cent, which is above the government’s defined fiscal deficit threshold.
In this scenario, the private participation in infrastructure development in India amounts to $103.2 bn until 2030. However, this composition’s share of private investment is negligible and needs to expand.
However, a 10 per cent increase in private investments in infrastructure to 14.7 per cent brings the potential opportunity amount to $324 billion, an annual average of $54 billion until 2030.
This will potentially support the government in maintaining healthy fiscal balances.
The report said that by increasing private participation in infrastructure development, the government could redirect expenditures towards other key segments of economic growth, such as public healthcare, strengthening human capital, debt payments, etc., which will support the long-term growth of the economy.
On a sector-wise analysis, renewable energy, data centres, roads and highways, warehousing and logistics have significant potential to attract private investments.
The report mentioned that sectors such as urban mass transit, airports, power distribution, etc., hold massive investment opportunities supported by rapid urbanisation and shifting demographics.
“For India to achieve its ambitious economic growth targets, massive infrastructure investments are necessary,” the report added.
—IANS
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