Developing infrastructure: Is a revival on the cards?

Structural reforms such as demonetization and goods and services tax along with worsening balance sheets at state-owned banks seem to have led to an economic slowdown in India. To spur economic growth and investment, the government recently announced a ₹2.11 trillion (US$32 billion) recapitalization package for state-owned banks and a ₹5.35 trillion highway-centric transportation programme, Bharatmala.

With recapitalization, the stressed public sector banks could help bankroll India’s infrastructure development. Through Bharatmala, the government plans to develop 44 economic corridors, multimodal logistical parks, coastal/port connectivity roads, and expressways, covering 34,800 kilometres and connecting 550 districts.

Bharatmala has the potential to stimulate the economy through increased production of construction material and equipment as well as job creation. In the long run, efficient and cheaper logistical support and freight movement could increase manufacturers’ competitiveness.

Amitabh Sharma, a corporate lawyer specializing in infrastructure, energy and resources, is the managing partner at HSA Advocates.