An estimated $2.2 trillion investment in infrastructure development is crucial for India to expand its GDP to $7 trillion by 2030, according to a report released on Thursday.
To achieve this ambitious economic size, India’s economy must grow at a compounded annual growth rate (CAGR) of 10.1% between 2024 and 2030, as highlighted in the report by Knight Frank India.
The report estimates that the investment opportunity for private sector participation in India’s infrastructure development ranges from $103.2 billion to $324 billion.
“India stands at the cusp of a transformative era in infrastructure development. By harnessing the power of private investment, we can accelerate our journey towards achieving ambitious economic growth targets,” said Rajeev Vijay, Executive Director-Government and Infrastructure Advisory, Knight Frank India.
The central government aims to reduce its gross fiscal deficit to below 4.5% by 2025. Increasing private sector involvement in infrastructure development is expected to play a pivotal role in meeting these fiscal deficit targets.
Currently, infrastructure investment is distributed among the central government (51.2%), state governments (44.1%), and private sector (4.7%). If this composition persists, the gross fiscal deficit in 2030 is projected to be 4.7%, exceeding the government’s fiscal deficit threshold.
In this scenario, private sector participation in infrastructure development is valued at $103.2 billion until 2030. However, the private sector’s current contribution remains minimal and must grow to bridge this gap.
An increase in private investment share to 14.7% could unlock a potential $324 billion investment opportunity, averaging $54 billion annually until 2030. This increased participation would enable the government to maintain healthier fiscal balances.
Enhanced private sector involvement in infrastructure development would also allow the government to redirect resources toward critical areas such as public healthcare, human capital development, and debt management, thereby fostering sustainable long-term growth.
On a sectoral basis, renewable energy, data centers, roads and highways, warehousing, and logistics present significant potential to attract private investments. Additionally, with rapid urbanization and evolving demographics, sectors like urban mass transit, airports, and power distribution offer substantial investment opportunities.
“For India to achieve its ambitious economic growth targets, massive infrastructure investments are necessary,” the report concluded.
(IANS)
