An estimated investment of $2.2 trillion into infrastructure development is imperative to support India’s GDP size to expand to $7 trillion by 2030, according to a report on Thursday.
To achieve an economic size of $7 trillion, India’s economy is required to grow at a CAGR of 10.1 per cent between 2024-2030, according to the report by Knight Frank India.
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), 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, the share of private investment in this composition is negligible and needs to expand.
However, an 10 per cent top up 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 to maintain healthy fiscal balances.
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, said the report.
On a sector-wise analysis, 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, sectors such as urban mass transit, airports, power distribution, etc, hold massive investment opportunities, the report mentioned.
“For India to achieve its ambitious economic growth targets, massive infrastructure investments are necessary,” the report added.
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