Govt’s escalated capital spending to support average annual GDP growth rate of 6%: Moody's

Expressing optimism over India’s growth story, Moody's said over the last ten years, the government has escalated its capital spending on infrastructure from Rs 1.97 trillion (1.6 per cent of GDP) in FY2014-15 to Rs 11.1 trillion (3.4 per cent of GDP) in FY2024-25. This leap reflects a broader strategy to enhance physical and digital infrastructure, supporting an average annual Gross Domestic Product (GDP) growth rate of 6 per cent and encouraging private sector participation through public-private partnerships (PPPs). The increase in government capital expenditure and private sector investments has catalysed India's infrastructure overhaul. India's infrastructure development has seen unprecedented progress over the past decade, driven by substantial capital spending from both government and private sectors. This transformation spans physical infrastructure, such as railways, roads, airports, and digital advancements, positioning India as a leader among emerging markets.

Recent developments have not only bolstered connectivity and logistics but also significantly improved the country's ranking on the World Bank's Logistics Performance Index (LPI), which has risen from 54 out of 160 countries a decade ago to 38 out of 139 countries. The infrastructure component of the LPI has similarly improved, moving from 58 to 47 in the same period. The government's continued focus on infrastructure development is evidenced by the Rs 11.1 trillion capital expenditure allocated for FY2024-25, a 16.9 per cent increase from the previous fiscal year. This investment is expected to drive further improvements in logistics, connectivity, and overall economic growth.

India's physical infrastructure has expanded dramatically. The country now boasts the second-largest road network globally, trailing only the United States. Airport passenger handling capacity has surged, with India recently surpassing Brazil and Indonesia to become the third-largest domestic aviation market, following China and the US. This growth is largely attributed to the government's Ude Desh ka Aam Naagrik (UDAN) scheme, which has enhanced regional aviation connectivity. Despite these achievements, per capita travel and consumption statistics remain lower compared to many emerging market peers. However, India's infrastructure density, including road and railway network lengths per 1,000 kilometres, surpasses that of countries like China.