Exclusive insights into our expectations from the Union Budget 2023

Expectations for the infrastructure sector 2023

The Parliamentary Budget Session is scheduled to begin on January 31. Infrastructure boost is expected to be one of the major focuses of the forthcoming Budget, and based on an exclusive interview with Anil Bansal, Senior Director, Urban Reforms & Infrastructure, IPE Global, the spokesperson said India has been witnessing renewed emphasis on urban development over the last few years, especially after the roll-out of several centrally sponsored schemes such as PMAY-Urban, Metro Rail & RRTS, Smart Cities Mission, Swachh Bharat Mission, AMRUT Mission, DAY-NULM, etc. He said we expect Budget 2023 to take this momentum forward and create the base for achieving major transformations by 2030.

1. Up to last year, central allocations to the sector have been heavily tilted towards urban housing and metro rail, with relatively low shares for other urban services such as water supply, sanitation, solid waste management, etc. With the initiation of AMRUT 2.0 and SBM 2.0 in 2021, we are looking at higher allocations for these sub-sectors this time around.

2. Looking at the slow progress of PMAY-Urban and the mammoth budget required for its completion (approx. 82,000 Crores required as per MoHUA for FY 2023-24), we expect this to put pressure on the availability of funds for other sub-sectors. From a broader perspective, this indicates the need to substantially raise overall funding for urban development (currently 0.7% of national GDP approx.), in view of the growing importance of sustainable cities as engines of economic growth and their major contribution to GDP.

3. GoI would do well to allocate special budgets for climate mitigation and adaptation efforts, for building climate-smart and climate-sensitive cities. Learnings from the ongoing SCM mission need to be absorbed and available digital and maturing technologies such as AI need to be leveraged further to deliver transformational improvements in urban services. This should be the focus of the next iteration of Smart Cities Mission, which is eagerly awaited by the industry.

4. We would also like to see diversification of the current focus on metro rail projects and allocation of adequate funds for the development of non-motorized transport for smaller towns, and electric vehicle (EV) charging infrastructure for two-wheelers / passenger cars/buses. Following the recent approval of the National Green Hydrogen Mission by the union cabinet, the announcement and launch of GH2-based bus and train transport projects in selected urban areas on a pilot basis would be a timely initiative.

5. Central financing, while being limited, will work best if it catalyzes other sources of sector finance, especially supporting ULBs to expand their tax and non-tax revenues, raise capital through municipal bonds, and attract private financing for viable projects. This is the force multiplier needed for achieving our urban sector vision and targets. For achieving this, all stakeholders must work towards full utilization of incentive and non-incentive-based funds allocated for property tax reforms, GIS-based urban planning, other urban reforms, preparation of city mobility plans/transport studies, IEC activities, etc. under various ongoing missions.

6. Delays in land acquisitions and slow execution of works are key challenges resulting in cost overruns, extra-budgetary resource requirements, and chronic slippages on urban projects and missions. This highlights the need to lay stronger emphasis on capacity building of project executing and implementing agencies, especially urban local bodies, and streamlining processes for land acquisition/permitting and project life-cycle management.