Infrastructure: Lifting Potential Growth | Indian Economy for UPSC CSE PDF Download

 Page 1


CHAPTER
12
INFRASTRUCTURE: LIFTING 
POTENTIAL GROWTH
The foremost among the responses initiated by the Union Government to overcome 
the pandemic-driven slowdown in the economy was increase in capital expenditure, 
aimed particularly at the creation of high quality physical and social infrastructure 
facilities. Keeping the momentum going over the last five years, capital expenditure 
of the Government has seen an almost three-fold increase in FY24, relative to FY20 
levels. The major beneficiaries of this step-up are key foundational assets like roads and 
railways. 
The burgeoning public investment has been complemented by a host of institutional and 
procedural reforms that facilitated project execution and timely issue resolutions. These 
include initiatives to enhance private sector participation through PPPs, facilitative 
measures like National Infrastructure Pipeline and Project Monitoring Group, de-
bottlenecking procedures PM-GatiShakti, and novel instruments such as REITS and 
InvITs to ease the constraints on long-term finances required for infrastructure 
investments. 
The Chapter shows that, with increased public investment over the last five years, 
India has witnessed significant expansion in physical and digital connectivity and 
social infrastructure including sanitation and water supply helping to improve quality 
of life of the people. At the same time, given the fiscal compulsions and consolidation 
plans of the Union and the State Governments, it is important that viable projects on 
the public-private participation mode emerge and get executed. Regular collection 
of sector-wise, source-wise information on infrastructure investment, bottom-up 
studies and aggregation of requirements of infrastructure and periodic assessment of 
utilisation of assets created will help making mid-course corrections on the country’s  
developmental path.
INTRODUCTION
12.1. Creation of resilient, world-class infrastructure—physical, social, financial and digital—is 
a key plank of India’s policy strategy to become ViksitBharat @ 2047. However, recent studies 
by the Asian Development Bank
1
 and the World Bank
2
 and recent estimates made by agencies 
like CRISIL
3
 have identified gaps in infrastructure investment in different sectors. Against this 
background, this chapter examines the recent developments in India’s infrastructure space 
with a special focus on the progress achieved in FY24. 
1  Meeting India’s Infrastructure Needs, ADB, 2017
2  Financing India’s Urban Infrastructure Needs World Bank, 2022
3  The Infrastructure Yearbook 2023 published by CRISIL
Page 2


CHAPTER
12
INFRASTRUCTURE: LIFTING 
POTENTIAL GROWTH
The foremost among the responses initiated by the Union Government to overcome 
the pandemic-driven slowdown in the economy was increase in capital expenditure, 
aimed particularly at the creation of high quality physical and social infrastructure 
facilities. Keeping the momentum going over the last five years, capital expenditure 
of the Government has seen an almost three-fold increase in FY24, relative to FY20 
levels. The major beneficiaries of this step-up are key foundational assets like roads and 
railways. 
The burgeoning public investment has been complemented by a host of institutional and 
procedural reforms that facilitated project execution and timely issue resolutions. These 
include initiatives to enhance private sector participation through PPPs, facilitative 
measures like National Infrastructure Pipeline and Project Monitoring Group, de-
bottlenecking procedures PM-GatiShakti, and novel instruments such as REITS and 
InvITs to ease the constraints on long-term finances required for infrastructure 
investments. 
The Chapter shows that, with increased public investment over the last five years, 
India has witnessed significant expansion in physical and digital connectivity and 
social infrastructure including sanitation and water supply helping to improve quality 
of life of the people. At the same time, given the fiscal compulsions and consolidation 
plans of the Union and the State Governments, it is important that viable projects on 
the public-private participation mode emerge and get executed. Regular collection 
of sector-wise, source-wise information on infrastructure investment, bottom-up 
studies and aggregation of requirements of infrastructure and periodic assessment of 
utilisation of assets created will help making mid-course corrections on the country’s  
developmental path.
INTRODUCTION
12.1. Creation of resilient, world-class infrastructure—physical, social, financial and digital—is 
a key plank of India’s policy strategy to become ViksitBharat @ 2047. However, recent studies 
by the Asian Development Bank
1
 and the World Bank
2
 and recent estimates made by agencies 
like CRISIL
3
 have identified gaps in infrastructure investment in different sectors. Against this 
background, this chapter examines the recent developments in India’s infrastructure space 
with a special focus on the progress achieved in FY24. 
1  Meeting India’s Infrastructure Needs, ADB, 2017
2  Financing India’s Urban Infrastructure Needs World Bank, 2022
3  The Infrastructure Yearbook 2023 published by CRISIL
Economic Survey 2023-24
406
12.2. The Chapter is divided into six sections. Section II investigates the question of  
infrastructure financing within the limitations of data and stresses the need for greater balance 
between private capital and public investment, which will be constrained by the requirements of 
fiscal consolidation by the Government. Section III discusses sectoral developments, challenges 
and outlook. Discussion on financial infrastructure and on social infrastructures like health 
and education is not covered in this chapter as these subjects are discussed in chapters 2, 7 and 
8 respectively. The fourth section shows the glimpse of the challenges and the opportunities 
across the infrastructure sector. Section V examines the efforts by the Government to reduce 
the bottlenecks in India’s infrastructure sector. Section VI summarises the discussions and 
presents some important aspects of the way forward. 
INFRASTRUCTURE FINANCING: THE PUBLIC 
EXPENDITURE PUSH
12.3. This section brings out two important facts about infrastructure financing in India. 
Firstly, despite many financial innovations in infrastructure financing in the recent years, 
capital expenditure by the Union and State Governments still have the central role in funding 
of large-scale infrastructure projects. Secondly, with the emergence of a number of new funding 
instruments and strategies, the infrastructure financing space has become complex, and, given 
the differential definitions and patterns followed in maintenance of statistics by different 
agencies, it is difficult to aggregate the total flow of funds for the creation of infrastructure in 
any given year. 
12.4. Even though budgetary capital expenditure cannot be equated to infrastructure spending
4
, 
the infrastructure thrust of the Government has led to an unprecedented increase in capital 
expenditure. Chart XII.1 shows that the capital expenditure of the Union Government increased 
by 2.2 times from FY21 to FY24 (PA) while that of the State governments increased by 2.1 times 
during the same period.
12.5. The capital expenditure of the Union Government broadly includes two components—
the spending by its line departments and the gross budgetary support (GBS) given to the 
Central Public Sector Enterprises (CPSEs). The share of gross budgetary support to two key 
connectivity segments, i.e., Railways and National Highway Authority of India, in the total 
capital expenditure of the Union Government increased from 36.4 per cent in FY21 to 42.9 per 
cent in FY24 (RE). These two components of capital expenditure increased by 2.6 times from 
FY21 to FY24 (RE) in their absolute values.
12.6. The aggregate investible resources of the CPSEs consists of the GBS and the resources 
raised by CPSEs themselves. In order to optimise the combined borrowing cost of the Union 
Government and the CPSEs, the higher-cost borrowings of the two major infra-CPSEs—NHAI 
and Indian Railway Finance Corporation (IRFC) - were progressively reduced from FY21 to 
FY24. This is, to a large extent, reflected in the reduction in the own resources of the CPSEs in 
4  Capital expenditure of the Government includes its spending to create any capital asset, which may not be created 
under a sector classified as infrastructure under the harmonious definition of infrastructure. 
Page 3


CHAPTER
12
INFRASTRUCTURE: LIFTING 
POTENTIAL GROWTH
The foremost among the responses initiated by the Union Government to overcome 
the pandemic-driven slowdown in the economy was increase in capital expenditure, 
aimed particularly at the creation of high quality physical and social infrastructure 
facilities. Keeping the momentum going over the last five years, capital expenditure 
of the Government has seen an almost three-fold increase in FY24, relative to FY20 
levels. The major beneficiaries of this step-up are key foundational assets like roads and 
railways. 
The burgeoning public investment has been complemented by a host of institutional and 
procedural reforms that facilitated project execution and timely issue resolutions. These 
include initiatives to enhance private sector participation through PPPs, facilitative 
measures like National Infrastructure Pipeline and Project Monitoring Group, de-
bottlenecking procedures PM-GatiShakti, and novel instruments such as REITS and 
InvITs to ease the constraints on long-term finances required for infrastructure 
investments. 
The Chapter shows that, with increased public investment over the last five years, 
India has witnessed significant expansion in physical and digital connectivity and 
social infrastructure including sanitation and water supply helping to improve quality 
of life of the people. At the same time, given the fiscal compulsions and consolidation 
plans of the Union and the State Governments, it is important that viable projects on 
the public-private participation mode emerge and get executed. Regular collection 
of sector-wise, source-wise information on infrastructure investment, bottom-up 
studies and aggregation of requirements of infrastructure and periodic assessment of 
utilisation of assets created will help making mid-course corrections on the country’s  
developmental path.
INTRODUCTION
12.1. Creation of resilient, world-class infrastructure—physical, social, financial and digital—is 
a key plank of India’s policy strategy to become ViksitBharat @ 2047. However, recent studies 
by the Asian Development Bank
1
 and the World Bank
2
 and recent estimates made by agencies 
like CRISIL
3
 have identified gaps in infrastructure investment in different sectors. Against this 
background, this chapter examines the recent developments in India’s infrastructure space 
with a special focus on the progress achieved in FY24. 
1  Meeting India’s Infrastructure Needs, ADB, 2017
2  Financing India’s Urban Infrastructure Needs World Bank, 2022
3  The Infrastructure Yearbook 2023 published by CRISIL
Economic Survey 2023-24
406
12.2. The Chapter is divided into six sections. Section II investigates the question of  
infrastructure financing within the limitations of data and stresses the need for greater balance 
between private capital and public investment, which will be constrained by the requirements of 
fiscal consolidation by the Government. Section III discusses sectoral developments, challenges 
and outlook. Discussion on financial infrastructure and on social infrastructures like health 
and education is not covered in this chapter as these subjects are discussed in chapters 2, 7 and 
8 respectively. The fourth section shows the glimpse of the challenges and the opportunities 
across the infrastructure sector. Section V examines the efforts by the Government to reduce 
the bottlenecks in India’s infrastructure sector. Section VI summarises the discussions and 
presents some important aspects of the way forward. 
INFRASTRUCTURE FINANCING: THE PUBLIC 
EXPENDITURE PUSH
12.3. This section brings out two important facts about infrastructure financing in India. 
Firstly, despite many financial innovations in infrastructure financing in the recent years, 
capital expenditure by the Union and State Governments still have the central role in funding 
of large-scale infrastructure projects. Secondly, with the emergence of a number of new funding 
instruments and strategies, the infrastructure financing space has become complex, and, given 
the differential definitions and patterns followed in maintenance of statistics by different 
agencies, it is difficult to aggregate the total flow of funds for the creation of infrastructure in 
any given year. 
12.4. Even though budgetary capital expenditure cannot be equated to infrastructure spending
4
, 
the infrastructure thrust of the Government has led to an unprecedented increase in capital 
expenditure. Chart XII.1 shows that the capital expenditure of the Union Government increased 
by 2.2 times from FY21 to FY24 (PA) while that of the State governments increased by 2.1 times 
during the same period.
12.5. The capital expenditure of the Union Government broadly includes two components—
the spending by its line departments and the gross budgetary support (GBS) given to the 
Central Public Sector Enterprises (CPSEs). The share of gross budgetary support to two key 
connectivity segments, i.e., Railways and National Highway Authority of India, in the total 
capital expenditure of the Union Government increased from 36.4 per cent in FY21 to 42.9 per 
cent in FY24 (RE). These two components of capital expenditure increased by 2.6 times from 
FY21 to FY24 (RE) in their absolute values.
12.6. The aggregate investible resources of the CPSEs consists of the GBS and the resources 
raised by CPSEs themselves. In order to optimise the combined borrowing cost of the Union 
Government and the CPSEs, the higher-cost borrowings of the two major infra-CPSEs—NHAI 
and Indian Railway Finance Corporation (IRFC) - were progressively reduced from FY21 to 
FY24. This is, to a large extent, reflected in the reduction in the own resources of the CPSEs in 
4  Capital expenditure of the Government includes its spending to create any capital asset, which may not be created 
under a sector classified as infrastructure under the harmonious definition of infrastructure. 
Infrastructure
407
Chart XII.1. However, this reduction was more than offset by the expansionary GBS, thereby 
allowing investment in roads and railways to increase sizeably between FY21 and FY24.
Chart XII.1. Union Government’s 
capital expenditure and its support 
for CPSEs and State Governments 
expands considerably
Chart XII.2. State Governments’ 
combined capital spending* also 
expands robustly
4. 3
5. 9
7. 4
9. 5
2. 3
2. 4
3. 1
3. 0
4. 8
4. 4
3. 6
3. 3
11.3
12.7
14.1
15.8
FY21 FY22 FY23 FY24
(PA)
? Lakh Crore
Resources of Public Enterprises
Grants for creation of Capital Assets
Union Govt Cape x
Total Capex
4 .6
5 .7
8 .1
9 .6
FY21 FY22 FY23
(RE)
FY24
(BE)
? Lakh Crore
State capital spending
Sources: Union Government Budget Documents for the Union Government and State Finance Accounts 
published by Comptroller and Auditor General of India and State Budgets for State Governments
Note: (i) RE stand for Revised Estimate, BE stand for Budget Estimate, PA stands for Provisional Accounts
          (ii) *State capital spending includes capital outlay and loans and advances by State Governments
         (iii) Data for resources of public enterprises for FY24 is a revised estimate
12.7. The support of the Union Government for capital expenditure of the State Governments 
and instititions increased by 31.6 per cent during FY21 and FY24. Further analysis of the 
capital expenditure of the State Governments is not possible as the data on the GBS by the 
State Government to the State Public Sector Enterprises (SPSEs) and the resources mobilised 
by SPSEs themselves are not available in a consolidated form. 
12.8. Charts XII.3 through XII.9 on important non-government sources of funding reiterates the 
fact that the recent infrastructure thrust in India, especially the surge in connectivity projects, 
has banked predominantly on public expenditure. The net flow of funds to infrastructure 
sectors through bank credit between March 2023 to March 2024 was only around ?79,000 
crore, much less than the GBS by the Union Government for either railways or roads. Charts 
XII.3 to XII.5 also show that the net flow of bank credit between March 2020 and March 2024 
was concentrated in only a few sectors roads, airports and power. However, the credit growth 
to infrastructure sectors in FY24 recovered to 6.5 per cent, as against the growth of 2.3 per cent, 
in FY23. 
12.9. The gross inflow of external commercial borrowings to infrastructure sectors also picked 
up to USD 9.05 billion in FY24, as against an average of USD 5.91 billion during FY20 to FY23. 
Page 4


CHAPTER
12
INFRASTRUCTURE: LIFTING 
POTENTIAL GROWTH
The foremost among the responses initiated by the Union Government to overcome 
the pandemic-driven slowdown in the economy was increase in capital expenditure, 
aimed particularly at the creation of high quality physical and social infrastructure 
facilities. Keeping the momentum going over the last five years, capital expenditure 
of the Government has seen an almost three-fold increase in FY24, relative to FY20 
levels. The major beneficiaries of this step-up are key foundational assets like roads and 
railways. 
The burgeoning public investment has been complemented by a host of institutional and 
procedural reforms that facilitated project execution and timely issue resolutions. These 
include initiatives to enhance private sector participation through PPPs, facilitative 
measures like National Infrastructure Pipeline and Project Monitoring Group, de-
bottlenecking procedures PM-GatiShakti, and novel instruments such as REITS and 
InvITs to ease the constraints on long-term finances required for infrastructure 
investments. 
The Chapter shows that, with increased public investment over the last five years, 
India has witnessed significant expansion in physical and digital connectivity and 
social infrastructure including sanitation and water supply helping to improve quality 
of life of the people. At the same time, given the fiscal compulsions and consolidation 
plans of the Union and the State Governments, it is important that viable projects on 
the public-private participation mode emerge and get executed. Regular collection 
of sector-wise, source-wise information on infrastructure investment, bottom-up 
studies and aggregation of requirements of infrastructure and periodic assessment of 
utilisation of assets created will help making mid-course corrections on the country’s  
developmental path.
INTRODUCTION
12.1. Creation of resilient, world-class infrastructure—physical, social, financial and digital—is 
a key plank of India’s policy strategy to become ViksitBharat @ 2047. However, recent studies 
by the Asian Development Bank
1
 and the World Bank
2
 and recent estimates made by agencies 
like CRISIL
3
 have identified gaps in infrastructure investment in different sectors. Against this 
background, this chapter examines the recent developments in India’s infrastructure space 
with a special focus on the progress achieved in FY24. 
1  Meeting India’s Infrastructure Needs, ADB, 2017
2  Financing India’s Urban Infrastructure Needs World Bank, 2022
3  The Infrastructure Yearbook 2023 published by CRISIL
Economic Survey 2023-24
406
12.2. The Chapter is divided into six sections. Section II investigates the question of  
infrastructure financing within the limitations of data and stresses the need for greater balance 
between private capital and public investment, which will be constrained by the requirements of 
fiscal consolidation by the Government. Section III discusses sectoral developments, challenges 
and outlook. Discussion on financial infrastructure and on social infrastructures like health 
and education is not covered in this chapter as these subjects are discussed in chapters 2, 7 and 
8 respectively. The fourth section shows the glimpse of the challenges and the opportunities 
across the infrastructure sector. Section V examines the efforts by the Government to reduce 
the bottlenecks in India’s infrastructure sector. Section VI summarises the discussions and 
presents some important aspects of the way forward. 
INFRASTRUCTURE FINANCING: THE PUBLIC 
EXPENDITURE PUSH
12.3. This section brings out two important facts about infrastructure financing in India. 
Firstly, despite many financial innovations in infrastructure financing in the recent years, 
capital expenditure by the Union and State Governments still have the central role in funding 
of large-scale infrastructure projects. Secondly, with the emergence of a number of new funding 
instruments and strategies, the infrastructure financing space has become complex, and, given 
the differential definitions and patterns followed in maintenance of statistics by different 
agencies, it is difficult to aggregate the total flow of funds for the creation of infrastructure in 
any given year. 
12.4. Even though budgetary capital expenditure cannot be equated to infrastructure spending
4
, 
the infrastructure thrust of the Government has led to an unprecedented increase in capital 
expenditure. Chart XII.1 shows that the capital expenditure of the Union Government increased 
by 2.2 times from FY21 to FY24 (PA) while that of the State governments increased by 2.1 times 
during the same period.
12.5. The capital expenditure of the Union Government broadly includes two components—
the spending by its line departments and the gross budgetary support (GBS) given to the 
Central Public Sector Enterprises (CPSEs). The share of gross budgetary support to two key 
connectivity segments, i.e., Railways and National Highway Authority of India, in the total 
capital expenditure of the Union Government increased from 36.4 per cent in FY21 to 42.9 per 
cent in FY24 (RE). These two components of capital expenditure increased by 2.6 times from 
FY21 to FY24 (RE) in their absolute values.
12.6. The aggregate investible resources of the CPSEs consists of the GBS and the resources 
raised by CPSEs themselves. In order to optimise the combined borrowing cost of the Union 
Government and the CPSEs, the higher-cost borrowings of the two major infra-CPSEs—NHAI 
and Indian Railway Finance Corporation (IRFC) - were progressively reduced from FY21 to 
FY24. This is, to a large extent, reflected in the reduction in the own resources of the CPSEs in 
4  Capital expenditure of the Government includes its spending to create any capital asset, which may not be created 
under a sector classified as infrastructure under the harmonious definition of infrastructure. 
Infrastructure
407
Chart XII.1. However, this reduction was more than offset by the expansionary GBS, thereby 
allowing investment in roads and railways to increase sizeably between FY21 and FY24.
Chart XII.1. Union Government’s 
capital expenditure and its support 
for CPSEs and State Governments 
expands considerably
Chart XII.2. State Governments’ 
combined capital spending* also 
expands robustly
4. 3
5. 9
7. 4
9. 5
2. 3
2. 4
3. 1
3. 0
4. 8
4. 4
3. 6
3. 3
11.3
12.7
14.1
15.8
FY21 FY22 FY23 FY24
(PA)
? Lakh Crore
Resources of Public Enterprises
Grants for creation of Capital Assets
Union Govt Cape x
Total Capex
4 .6
5 .7
8 .1
9 .6
FY21 FY22 FY23
(RE)
FY24
(BE)
? Lakh Crore
State capital spending
Sources: Union Government Budget Documents for the Union Government and State Finance Accounts 
published by Comptroller and Auditor General of India and State Budgets for State Governments
Note: (i) RE stand for Revised Estimate, BE stand for Budget Estimate, PA stands for Provisional Accounts
          (ii) *State capital spending includes capital outlay and loans and advances by State Governments
         (iii) Data for resources of public enterprises for FY24 is a revised estimate
12.7. The support of the Union Government for capital expenditure of the State Governments 
and instititions increased by 31.6 per cent during FY21 and FY24. Further analysis of the 
capital expenditure of the State Governments is not possible as the data on the GBS by the 
State Government to the State Public Sector Enterprises (SPSEs) and the resources mobilised 
by SPSEs themselves are not available in a consolidated form. 
12.8. Charts XII.3 through XII.9 on important non-government sources of funding reiterates the 
fact that the recent infrastructure thrust in India, especially the surge in connectivity projects, 
has banked predominantly on public expenditure. The net flow of funds to infrastructure 
sectors through bank credit between March 2023 to March 2024 was only around ?79,000 
crore, much less than the GBS by the Union Government for either railways or roads. Charts 
XII.3 to XII.5 also show that the net flow of bank credit between March 2020 and March 2024 
was concentrated in only a few sectors roads, airports and power. However, the credit growth 
to infrastructure sectors in FY24 recovered to 6.5 per cent, as against the growth of 2.3 per cent, 
in FY23. 
12.9. The gross inflow of external commercial borrowings to infrastructure sectors also picked 
up to USD 9.05 billion in FY24, as against an average of USD 5.91 billion during FY20 to FY23. 
Economic Survey 2023-24
408
The resource mobilisation by infrastructure sectors
5
 through debt and equity issuances in 
the capital market was just over ?1,00,000 crore during FY24. Real estate investment trusts 
REITs) have raised ?18,840 crore from year 2019 to 2024 while Infrastructure investment 
trusts (InvITs) raised a total of ?1,11,294 crore in the last five years (2019-2024).
Chart XII.3. Outstanding credit to 
infrastructure: March 2024
Chart XII.4. Average annual growth 
rate in outstanding credit from 
March 2020 to March 2024
6 .4
1 .4
3 .2
2 .0
13.0
Po w er
T e l eco m
Ro ads
Ot he rs
To ta l
? lakh crore
3.1
-1.8
15.1
3.4
4.9
Power
Telecom
Roads
Others
Total
Per cent
Chart XII.5. Share in change in 
outstanding credit from March 2020 
to March 2024 
Chart XII.6. Inflow of external 
commercial borrowing to 
infrastructure sectors
30.3
-4 .1
61.9
1 .0
-2 .7
1 .0
12.7
Po w er
T e l eco m
Ro ads
A irp o rts
Po rts
Rail wa ys *
Ot he rs
Per cent
23.6
8.6
12.5
2.5
9.1
3.1
2.7
3.3
Infrastructure
Others
Power
Telecom
USD billion
FY20 to FY23
FY24
5  Note: Infrastructure sector has been considered based on the following sub-sectors - For Equity: Airport & Airport 
services, Civil Construction, Education, E-Learning, Healthcare Research, Analytics & Technology, Hotels & 
Resorts, Port & Port services, Power – Transmission, Power Distribution, Power Generation, Railway Wagons, 
Real Estate Investment Trusts (REITs), Real Estate related services, Residential, Commercial Projects, Road 
Assets–Toll, Annuity, Hybrid-Annuity, Road Transport, Ship Building & Allied Services, Shipping, Telecom – 
Infrastructure, Waste Management and Water Supply & Management. For Debt: Construction, Infrastructure 
(Power, Telecommunications, Roads, Airports, Ports, Railways and Other Infrastructure), Civil Construction, 
Energy, Healthcare, Hotels & Resorts, Real Estate related services, Road Assets - Toll, Annuity, Hybrid-Annuity, 
Telecom – Infrastructure and Residential, Commercial Projects
Page 5


CHAPTER
12
INFRASTRUCTURE: LIFTING 
POTENTIAL GROWTH
The foremost among the responses initiated by the Union Government to overcome 
the pandemic-driven slowdown in the economy was increase in capital expenditure, 
aimed particularly at the creation of high quality physical and social infrastructure 
facilities. Keeping the momentum going over the last five years, capital expenditure 
of the Government has seen an almost three-fold increase in FY24, relative to FY20 
levels. The major beneficiaries of this step-up are key foundational assets like roads and 
railways. 
The burgeoning public investment has been complemented by a host of institutional and 
procedural reforms that facilitated project execution and timely issue resolutions. These 
include initiatives to enhance private sector participation through PPPs, facilitative 
measures like National Infrastructure Pipeline and Project Monitoring Group, de-
bottlenecking procedures PM-GatiShakti, and novel instruments such as REITS and 
InvITs to ease the constraints on long-term finances required for infrastructure 
investments. 
The Chapter shows that, with increased public investment over the last five years, 
India has witnessed significant expansion in physical and digital connectivity and 
social infrastructure including sanitation and water supply helping to improve quality 
of life of the people. At the same time, given the fiscal compulsions and consolidation 
plans of the Union and the State Governments, it is important that viable projects on 
the public-private participation mode emerge and get executed. Regular collection 
of sector-wise, source-wise information on infrastructure investment, bottom-up 
studies and aggregation of requirements of infrastructure and periodic assessment of 
utilisation of assets created will help making mid-course corrections on the country’s  
developmental path.
INTRODUCTION
12.1. Creation of resilient, world-class infrastructure—physical, social, financial and digital—is 
a key plank of India’s policy strategy to become ViksitBharat @ 2047. However, recent studies 
by the Asian Development Bank
1
 and the World Bank
2
 and recent estimates made by agencies 
like CRISIL
3
 have identified gaps in infrastructure investment in different sectors. Against this 
background, this chapter examines the recent developments in India’s infrastructure space 
with a special focus on the progress achieved in FY24. 
1  Meeting India’s Infrastructure Needs, ADB, 2017
2  Financing India’s Urban Infrastructure Needs World Bank, 2022
3  The Infrastructure Yearbook 2023 published by CRISIL
Economic Survey 2023-24
406
12.2. The Chapter is divided into six sections. Section II investigates the question of  
infrastructure financing within the limitations of data and stresses the need for greater balance 
between private capital and public investment, which will be constrained by the requirements of 
fiscal consolidation by the Government. Section III discusses sectoral developments, challenges 
and outlook. Discussion on financial infrastructure and on social infrastructures like health 
and education is not covered in this chapter as these subjects are discussed in chapters 2, 7 and 
8 respectively. The fourth section shows the glimpse of the challenges and the opportunities 
across the infrastructure sector. Section V examines the efforts by the Government to reduce 
the bottlenecks in India’s infrastructure sector. Section VI summarises the discussions and 
presents some important aspects of the way forward. 
INFRASTRUCTURE FINANCING: THE PUBLIC 
EXPENDITURE PUSH
12.3. This section brings out two important facts about infrastructure financing in India. 
Firstly, despite many financial innovations in infrastructure financing in the recent years, 
capital expenditure by the Union and State Governments still have the central role in funding 
of large-scale infrastructure projects. Secondly, with the emergence of a number of new funding 
instruments and strategies, the infrastructure financing space has become complex, and, given 
the differential definitions and patterns followed in maintenance of statistics by different 
agencies, it is difficult to aggregate the total flow of funds for the creation of infrastructure in 
any given year. 
12.4. Even though budgetary capital expenditure cannot be equated to infrastructure spending
4
, 
the infrastructure thrust of the Government has led to an unprecedented increase in capital 
expenditure. Chart XII.1 shows that the capital expenditure of the Union Government increased 
by 2.2 times from FY21 to FY24 (PA) while that of the State governments increased by 2.1 times 
during the same period.
12.5. The capital expenditure of the Union Government broadly includes two components—
the spending by its line departments and the gross budgetary support (GBS) given to the 
Central Public Sector Enterprises (CPSEs). The share of gross budgetary support to two key 
connectivity segments, i.e., Railways and National Highway Authority of India, in the total 
capital expenditure of the Union Government increased from 36.4 per cent in FY21 to 42.9 per 
cent in FY24 (RE). These two components of capital expenditure increased by 2.6 times from 
FY21 to FY24 (RE) in their absolute values.
12.6. The aggregate investible resources of the CPSEs consists of the GBS and the resources 
raised by CPSEs themselves. In order to optimise the combined borrowing cost of the Union 
Government and the CPSEs, the higher-cost borrowings of the two major infra-CPSEs—NHAI 
and Indian Railway Finance Corporation (IRFC) - were progressively reduced from FY21 to 
FY24. This is, to a large extent, reflected in the reduction in the own resources of the CPSEs in 
4  Capital expenditure of the Government includes its spending to create any capital asset, which may not be created 
under a sector classified as infrastructure under the harmonious definition of infrastructure. 
Infrastructure
407
Chart XII.1. However, this reduction was more than offset by the expansionary GBS, thereby 
allowing investment in roads and railways to increase sizeably between FY21 and FY24.
Chart XII.1. Union Government’s 
capital expenditure and its support 
for CPSEs and State Governments 
expands considerably
Chart XII.2. State Governments’ 
combined capital spending* also 
expands robustly
4. 3
5. 9
7. 4
9. 5
2. 3
2. 4
3. 1
3. 0
4. 8
4. 4
3. 6
3. 3
11.3
12.7
14.1
15.8
FY21 FY22 FY23 FY24
(PA)
? Lakh Crore
Resources of Public Enterprises
Grants for creation of Capital Assets
Union Govt Cape x
Total Capex
4 .6
5 .7
8 .1
9 .6
FY21 FY22 FY23
(RE)
FY24
(BE)
? Lakh Crore
State capital spending
Sources: Union Government Budget Documents for the Union Government and State Finance Accounts 
published by Comptroller and Auditor General of India and State Budgets for State Governments
Note: (i) RE stand for Revised Estimate, BE stand for Budget Estimate, PA stands for Provisional Accounts
          (ii) *State capital spending includes capital outlay and loans and advances by State Governments
         (iii) Data for resources of public enterprises for FY24 is a revised estimate
12.7. The support of the Union Government for capital expenditure of the State Governments 
and instititions increased by 31.6 per cent during FY21 and FY24. Further analysis of the 
capital expenditure of the State Governments is not possible as the data on the GBS by the 
State Government to the State Public Sector Enterprises (SPSEs) and the resources mobilised 
by SPSEs themselves are not available in a consolidated form. 
12.8. Charts XII.3 through XII.9 on important non-government sources of funding reiterates the 
fact that the recent infrastructure thrust in India, especially the surge in connectivity projects, 
has banked predominantly on public expenditure. The net flow of funds to infrastructure 
sectors through bank credit between March 2023 to March 2024 was only around ?79,000 
crore, much less than the GBS by the Union Government for either railways or roads. Charts 
XII.3 to XII.5 also show that the net flow of bank credit between March 2020 and March 2024 
was concentrated in only a few sectors roads, airports and power. However, the credit growth 
to infrastructure sectors in FY24 recovered to 6.5 per cent, as against the growth of 2.3 per cent, 
in FY23. 
12.9. The gross inflow of external commercial borrowings to infrastructure sectors also picked 
up to USD 9.05 billion in FY24, as against an average of USD 5.91 billion during FY20 to FY23. 
Economic Survey 2023-24
408
The resource mobilisation by infrastructure sectors
5
 through debt and equity issuances in 
the capital market was just over ?1,00,000 crore during FY24. Real estate investment trusts 
REITs) have raised ?18,840 crore from year 2019 to 2024 while Infrastructure investment 
trusts (InvITs) raised a total of ?1,11,294 crore in the last five years (2019-2024).
Chart XII.3. Outstanding credit to 
infrastructure: March 2024
Chart XII.4. Average annual growth 
rate in outstanding credit from 
March 2020 to March 2024
6 .4
1 .4
3 .2
2 .0
13.0
Po w er
T e l eco m
Ro ads
Ot he rs
To ta l
? lakh crore
3.1
-1.8
15.1
3.4
4.9
Power
Telecom
Roads
Others
Total
Per cent
Chart XII.5. Share in change in 
outstanding credit from March 2020 
to March 2024 
Chart XII.6. Inflow of external 
commercial borrowing to 
infrastructure sectors
30.3
-4 .1
61.9
1 .0
-2 .7
1 .0
12.7
Po w er
T e l eco m
Ro ads
A irp o rts
Po rts
Rail wa ys *
Ot he rs
Per cent
23.6
8.6
12.5
2.5
9.1
3.1
2.7
3.3
Infrastructure
Others
Power
Telecom
USD billion
FY20 to FY23
FY24
5  Note: Infrastructure sector has been considered based on the following sub-sectors - For Equity: Airport & Airport 
services, Civil Construction, Education, E-Learning, Healthcare Research, Analytics & Technology, Hotels & 
Resorts, Port & Port services, Power – Transmission, Power Distribution, Power Generation, Railway Wagons, 
Real Estate Investment Trusts (REITs), Real Estate related services, Residential, Commercial Projects, Road 
Assets–Toll, Annuity, Hybrid-Annuity, Road Transport, Ship Building & Allied Services, Shipping, Telecom – 
Infrastructure, Waste Management and Water Supply & Management. For Debt: Construction, Infrastructure 
(Power, Telecommunications, Roads, Airports, Ports, Railways and Other Infrastructure), Civil Construction, 
Energy, Healthcare, Hotels & Resorts, Real Estate related services, Road Assets - Toll, Annuity, Hybrid-Annuity, 
Telecom – Infrastructure and Residential, Commercial Projects
Infrastructure
409
Chart XII.7. Funding of 
infrastructure sectors through 
domestic capital market debt sources
Chart XII.8. Funding of 
infrastructure sectors through equity 
issuance
162.1
96.0
61.0
46.6
78.6
FY 20 FY 21 FY 22 FY 23 FY 24
? thousand crore
22.4
6 .6
21.8
17.0
22.8
FY 20 FY 21 FY 22 FY 23 FY 24
? thousand crore
Sources: Data on credit and external commercial borrowings were sourced from the Reserve Bank of India. The 
data on domestic debt and equity issuances were sourced from Securities and Exchange Board of India
Note: (*): In Chart XII.5, the reference to Railways does not include Indian Railways.
Chart XII.9. FDI equity inflows to infrastructure sectors during FY24 
35. 1
31. 2
14. 1
9. 1
4. 6
94. 1
Infra construction Non-Conv
Energy
Power Sea Transport Other Total
? thousand crore
Table XII.1: Infrastructure-related FDI: key ratios
FDI Equity Inflows to Infrastructure Sectors as Per Cent of GDP: FY20 to FY24 0.28
FDI Equity Inflows to Infrastructure Sectors as Per Cent of GDP: FY24 0.32
FDI Equity Inflows to Infrastructure Sectors as Per Cent of Total FDI Equity 
Inflows: FY20 to FY24
17.3
FDI Equity Inflows to Infrastructure Sectors as Per Cent of Total FDI Equity 
Inflows: FY24
25.6
Sources: Calculations Based on Data Received from Department of Industrial Policy and Promotion
Note: The sectors considered include infrastructure construction, non-conventional energy, telecom, power, sea 
and air transport, railway components