Budget 2022-23: Past Record Suggests Government Would Have To Work Extraordinarily Hard To Meet These Three Ambitious Targets

One of the commendable achievements of the Modi government since coming to office in 2014 has been its focus on raising the capital expenditure which is key to putting money in those projects which are remunerative for the country’s economy in the long run. From less than Rs two lakh crore in 2014-15 to Rs 7.5 lakh crore in the latest budget, the capex of the centre has risen considerably, almost doubling from 1.6 per cent to 2.9 per cent of the GDP.

Most of the investment has gone into funding infrastructure, especially roadways which shows in the outcomes achieved. The total length of national highways has gone up from 91,000 kms in April 2014 to over 1,40,000 kms in December 2021 (as per the information provided by Union Road Transport and Highways Minister Nitin Gadkari in Parliament).

Even in 2020-21, where the first two quarters were washed away due to national lockdowns caused by Covid-19 pandemic, the government ended up constructing over 13,000 km of NHs, exceeding its own target of 11,000 km. Though the pace slowed down in 2021-22 when by November end, only 42 per cent of the targeted 12,000 km of NH could be completed.

This takes us to the latest announcement by Union Finance Minister Nirmala Sitharaman in her latest budget speech, where she declared the centre’s intention to build 25,000 kms of NH in 2022-23. ‘PM GatiShakti Master Plan for Expressways will be formulated in 2022-23 to facilitate faster movement of people and goods. The National Highways network will be expanded by 25,000 km in 2022-23,’ she said.

As per PM GatiShakti Master Plan, the government’s target is to have 2 lakh kms of NH by 2024-25. Clearly, the need was to quicken the pace of construction. However, 25,000 km of NHs in the current fiscal alone is too ambitious even by this government’s high standards of achievement. If we take last seven years and eight months period, the average monthly speed of NH construction is over 500 kms. If we go by 2020-21 pace, it would be more than a 1,000 km per addition per month. Gadkari will have to almost double even that if he has to deliver on the promise laid out in the latest budget.

Second highly ambitious announcement was about Vande Bharat trains. “Four hundred new-generation Vande Bharat Trains with better energy efficiency and passenger riding experience will be developed and manufactured during the next three years,” Sitharaman promised in her budget speech. Interestingly, the movement on this front over the last three years doesn’t inspire confidence.

Originally called the Train 18 (for a world class train that was targeted to be indigenously developed by 2018), Vande Bharat was built from design to development in just 18 months by Integral Coach Factory in Chennai during the tenure of the then General Manager Sudhanshu Mani. It was a historic achievement by the ICF team, something even the Indian Railways had doubts about.

In his Independence Day speech, PM Modi had promised 75 Vande Bharat trains in 75 weeks. One-third of the targeted time has passed but no new trains have been delivered yet. One hopes that the new Union Minister for Railways Ashwini Vaishnaw will ensure that not only PM’s promise of 75 trains but also the latest announcement of 400 trains in the next three years is met.

Another challenge would be to actually build tracks that can support these trains at their full capacity of 160 km/hr. Unfortunately, only the Delhi-Agra track can run trains at that speed. So, the challenge is not just to produce high speed modern trains but also to build capable tracks to utilise their full potential.

Third announcement was not ambitious from the point of view of quantum but can be dubbed so given the poor record of the government. To the disappointment of many who dubbed it underwhelming, Sitharaman announced disinvestment target of Rs 65,000 crore for the upcoming fiscal.

This sounds low but is more realistic. For 2021-22, the government had set a target of Rs 1.75 lakh crore for disinvestment. So far, only Rs 12,000 crore has been realised though the mega LIC IPO is coming up along with strategic sale of other PSUs. Nonetheless, the government is still expecting to mop up Rs 78,000 before the end of this fiscal which is still pie in the sky unless it moves fast.

In 2020-21, the government targeted disinvestment worth Rs 2.1 lakh crore but ended up with only Rs 37,800 crore. In 2019-20, its target was Rs 1.05 lakh crore but disinvestment receipts stood at only Rs 50,000 crore. Only in 2017-18 and 2018-19, the government raised more money via disinvestment than it had targeted (Rs 1 lakh crore and Rs 80,000 crore, respectively).

Except those couple of years, the centre has failed to achieve the targets every single fiscal since 2014. Mind you that the Modi government has done more disinvestment than any other previous government (and no one comes even close when total money raised via this route is accounted for) but it has fallen short of its own ambitious targets.

Be that as it may, the country will benefit greatly if the ministers responsible for delivering can come even close to achieving these three ambitious promises. Despite the not so encouraging past record, one can only hope that the government exceeds the expectations.