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India to splash $59bn on infrastructure in 2017-18

The world’s third-largest economy is ramping up efforts to improve its transport systems by attracting private capital, including from abroad.

India plans to earmark 3.96 trillion rupees ($58.7 billion; €54.3 billion) to infrastructure projects in the coming year, about 60 percent of which will be used to build and upgrade roads, airports and railways. 

Arun Jaitley, the country’s Minister of Finance and Corporate Affairs, said in his Budget speech yesterday that the government aims to increase its allocation to the road sector from 580 billion rupees last year to 649 billion rupees in 2017. The money will be used to upgrade and complete India’s motorway network. The Minister said 2,000km of coastal road projects are being prioritised so as to better connect ports and rural villages. 

He pointed out that the total length of roads built from 2014 to this year stood at about 140,000km, a figure significantly higher than that developed during the previous three. 

India also plans to launch more airport PPPs in “tier-two” cities, following amendments to land legislation intended to facilitate private investment. Proceeds from airport privatisations will be used by the government to upgrade public-owned airports. 

The government is currently inviting bidders for the operation and maintenance concessions of two international airports under a PPP model, with bids due by March. The Airport Authority of India controls most of the country’s aviation hubs, with only four major airports in the hands of two local conglomerates, GMR Group and GVK Group. 

The 2017 Budget also includes an allocation of 100 billion rupees to install optic fibre cable network throughout the country, as well as reforms in the oil sector to create a state-run “major” that can compete with private sector oil and gas companies. 

In the coming year, 3,500km of railway line will be commissioned in a bid to enhance throughput by 10 percent in the next three years. The total capital and development expenditure on railways has been set at 1.31 trillion rupees, 550 billion of which will be provided by the government, according to Jaitley. 

The Minister said that Indian Railways has set up joint ventures with nine state governments to work on an initial bundle of 70 projects. At least 25 stations are also expected to be awarded for redevelopment this year, while 500 stations will be equipped with upgraded facilities, including lifts and escalators. 

The government also proposes to feed about 7,000 stations with solar power in the medium term.