To achieve an economic size of USD 7 trillion by 2030, India’s economy is required to grow at a CAGR of 10.1 per cent between 2024-2030, it added.
Knight Frank India CMD Shishir Baijal said, “Strong impetus on infrastructural development and increased budgetary allocation by government has led to India’s ranking in the Logistics Performance Index (LPI) improve from 54 in 2014 to 38 in 2023.”
In the last few years, he said, there has been aggressive push by the policy makers to significantly expand India’s infrastructure.
Baijal said this widens the scope for private players to actively participate in India’s infrastructure development and economic growth.
“However, there are certain bottlenecks limiting this scope. Hence, radical measures are required to induce a higher allocation of private investments towards infrastructure development to balance fiscal prudence to the government’s budget and bring inclusive and long-term sustainable economic growth in the country,” he said. Knight Frank’s report said that the central and state governments’ heavy reliance on infrastructure investments could strain fiscal deficit targets. “Private participation in infrastructure development in India has decreased significantly, from USD 160 billion (46.4 per cent of total investments) between 2009-13 to USD 39.2 billion (7.2 per cent) between 2019-23,” the consultant pointed out.
This shift has led to a larger share of government-led investments, potentially widening the fiscal deficit, it added.
“Maintaining a controlled fiscal deficit is crucial for long-term economic stability and effective debt management. The central government aims to reduce its gross fiscal deficit to below 4.5 per cent by 2025,” the report said.
Increasing private sector participation in infrastructure development would help balance fiscal deficit targets, the consultant felt.
“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,” Knight Frank said.
On a sector-wise analysis, the report found out that 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, the consultant said that sectors such as urban mass transit, airports, power distribution etc. hold massive investment opportunities.