The Union Budget of 2022-2023 that estimates India’s economic growth at 9.2% amidst the Omicron wave entered with a strong statement into the AmritKaal, that ushers India@100 with its goal at a macroeconomic level growth. It focusses to promote public and private investments, development backed by technology, digital economy, fintech, energy and climate action. Building on the Budget of 2021-2022, this Budget of 2022-2023 acknowledges strengthening of health infrastructure, Productivity Linked Incentive for achieving the vision of AtmaNirbhar Bharat, commencement of activities of the National Bank for Financing Infrastructure and Development (NaBFID) and National Asset Reconstruction Company and continues to provide a blueprint for India@100 along with a multi-modal approach guided by PM GatiShakti.

PM GatiShakti

Propelled by seven engines, namely, Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure and supported by Energy Transmission, IT Communication, Bulk Water & Sewerage, Social Infrastructure, Clean Energy and Public Private Partnership (PPP), PM GatiShakti is aimed to steer sustainable development, economic transformation, seamless multimodal connectivity and logistics efficiency comprising the State Government infrastructure and National Infrastructure Pipeline.  

Roads: Expansion of National Highways network by 25,000 km in 2022-23 along with mobilization of 20,000 crore

Seamless Multimodal Movement and Logistics: Unified Logistics Interface Platform (ULIP) for data exchange to improve the logistics scenario in India by adopting a unified and integrated view of the Indian logistics value chain. Further boost has been facilitated through implementation of Multimodal Logistics Parks at four locations through PPP mode.

Railways: Introduction of 400 new Vande Bharat trains, 100 PM Gati Shakti cargo terminals in the next three years, bringing 2,000 km of network under the indigenous world class technology Kavach, along with redevelopment and modernization of the stations, integration of Postal and Railways networks, aiding local business and supply chain through ‘One Station-One Product’ concept are a few measures to ensure next generation of energy efficient trains, better passenger experience and seamless movement.

Connectivity: Multimodal connectivity between mass urban transport and railway stations is envisaged. Innovative solutions such as National Ropeways Development Programme on PPP mode has found a place in the Budget wherein 8 ropeway projects for a length of 60 km will be awarded.

Inclusive Development

Financing startups for agriculture and rural enterprise through a fund with blended capital raised under the co-investment model, facilitated through NABARD has been provided. River linking projects and finalization of Detailed Project Report for linking of 5 rivers has also been contemplated.

Extension of Emergency Credit Line Guarantee Scheme up to March 2023 and expansion of its guarantee cover by 50,000 crores to total cover of 5 lakh crores in order to aid the MSME sector with additional credit has been put forward. 

Infusion of funds in the Credit Guarantee Trust for Micro and Small Enterprises scheme and an outlay of 6,000 crore in the Raising and Accelerating MSME Performance (RAMP) programme shall assist in additional credit, employment opportunities and infusing competitiveness, efficiency and resilience in the MSME sector. Allocation of 48,000 crores for affordable housing covering 80 lakh houses along with reduction of time required for approvals related to land and construction is a step to ensure housing for all.

Under the Prime Minister’s Development Initiative for North-East, PM-DevINE, scheme, an initial allocation of 1,500 crore has been presented for funding infrastructure and social development projects such as roads and ropeways. The Budget also proposes construction of village infrastructure, tourist centres, road connectivity and provisioning of decentralized renewable energy.

Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition, and Climate Action

Bosting ease of doing business, expanding the scope of single window portal for all green clearances, urban development especially of 2 and 3 tier cities, modernization of building byelaws, implementation of Town Planning Schemes (TPS), and Transit Oriented Development (TOD) are a few other measures proposed by the Budget. 

In order to promote clean and sustainable mobility emphasis on clean tech and governance solutions, special mobility zones with zero fossil-fuel policy, and EV vehicles is given.

Impetus has been given to government procurement by introducing reforms such as use of transparent quality criteria, payment of 75 per cent of running bills within 10 days, settlement  through conciliation, end-to-end online e-Bill System, and use of surety bonds instead of bank guarantee. 

The Budget has also used PPP as the mode for laying optical fibre in all villages to enable access to affordable broadband and mobile service especially since 5G mobile services shall be rolled out. 

Amendments to the Insolvency and Bankruptcy Code to enhance the efficacy of the resolution process and introducing a new legislation to replace the Special Economic Zones Act in to ensure optimal usage of available infrastructure and competitiveness is of the exports are a few suggested legislative reforms. 

Allocation of 19,500 crore in the Solar sector, introducing four pilot projects for coal gasification and conversion of coal into required chemicals, transition to circular economy and carbon neutral economy are steps in the direction of combating climate change.

Financing of Investments

Promotion of green infrastructure through issue of sovereign Green Bonds, setting up of International Arbitration Centre in the GIFT City, inclusion of 107 Data Centres and Energy Storage Systems within the umbrella of Infrastructure, promotion of thematic funds for blended finance with 20% Government share are a few measures introduced by the Budget to embolden its objective of financing of investments. The financial viability of the Infrastructure projects has by adopting global best practices, innovative ways of financing, and balanced risk allocation has been proposed.

CapEx Coupled with Infrastructure Spearheads Budget 2022

The Budget ensures capacity building for Infrastructure projects. It aims to provide seamless connectivity, logistics synergy and convenience for the commuters along with reducing congestion and promoting tourism. The Budget promotes innovative ways of financing, reduces logistics cost and time and aims to improve international competitiveness.

Along with its proposed reforms and allocation of funds, it can be said that the Infrastructure coupled with capital expenditure will be spearheading the Budget. We hope to see contracts awarded to EPC Contractors and PPP Projects for rail development. Expansion of expressway through EPC/PPP model will undoubtably usher concession to private players and EPC Contractors. Overall, the Infrastructure development through PPP mode has been propagated by the Budget right from village infrastructure, urban planning, projects in the Northeast region to Solar projects and green infrastructure projects.

Moreover, reforms in legislation and policies such as the procurement policy is a stride towards economic development and building the nation. Finally the Budget also provides for issuance of Surety Bond to the Developers/Contractors in the place of Performance Bank Guarantee (PBG) which will ease the financial burden of the Concessionaire/Developer/Contractors in obtaining the said PBG from the Banks by depositing of 100% Margin Money.