Government budgets alone cannot meet India's infrastructure financing needs: Anantha Nageswaran, CEA
Chennai, August 3
While the India's capital expenditure has surged more than fourfold to over Rs 12 lakh crore over the last 7-8 years, the financing required for India's infrastructure is beyond the capacity of government budgets, said Anantha Nageswaran, Chief Economic Adviser, Government of India.
Addressing the CII Tamil Nadu Infrastructure Summit 2026 on Monday, Nageswaran said the effective figure rises to nearly Rs 17 lakh crore when grants that create assets in states are included.
"It has raised the capital expenditure from around Rs 2.5 lakh crore rupees to over Rs 12 lakh crore rupees for the current budget and more than a fourfold increase and the grants, that create assets in the states -- the effective figure is close to Rs 17 lakh crores," he said.
Nageswaran noted that the spending has supported the development of roads, railways, ports, power lines and digital infrastructure across the country. However, Nageswaran stressed that the scale of infrastructure financing required in India cannot be met by government budgets alone.
"The financing required for the infrastructure in India is far beyond what any government budget can carry," he said.
"The public purse opened the innings but it cannot bat all day. The rest must come from private capital and not just any capital but patient capital," Nageswaran said, referring to capital that is willing to earn steady returns over a period of 20-30 years.
He said the government's spending on infrastructure has helped create assets and support economic capacity, but private investment will be crucial to meet the country's future infrastructure requirements.
Nageswaran also highlighted the Infrastructure Risk Guarantee Fund announced in this year's Budget, saying it is intended to provide greater confidence to private developers.
"This year's budget took a step in that direction with the Infrastructure Risk Guarantee Fund meant to give private developers more confidence," he said.However, he cautioned that guarantees alone would not be sufficient to attract patient capital. "Patient capital does not arrive because we ask nicely or because we insure it against our own unpredictability," he noted.
— ANI
Reader Comments
As someone who works in infrastructure financing, this is a very realistic assessment. The government has done well to increase capex, but the sheer scale of what India needs - from highways to smart cities - requires a robust PPP model. The risk guarantee fund is a good start, but we need more innovative financing mechanisms.
The cricket analogy is perfect - "public purse opened the innings but cannot bat all day" 🏏 But my concern is: will private capital actually flow to areas like rural roads and irrigation where returns are uncertain? We need to ensure that essential infrastructure doesn't get neglected just because it's not commercially viable.
Good analysis by the CEA, but let's be honest - we've heard this before. The real question is execution. We have so many stalled PPP projects from the previous decades. The government needs to create a more predictable regulatory environment, not just guarantees. Investors need clarity on tariffs, land acquisition, and dispute resolution.
Impressive numbers - going from Rs 2.5 lakh crore to Rs 17 lakh crore effective is remarkable progress. But the CEA is right; government alone can't sustain this. India needs to attract more foreign institutional investors who are willing to stay for the long haul. Maybe we need more sovereign wealth funds and pension funds from abroad to come in.
One thing often missed in this debate is the role of state governments. If states don't have the capacity to execute projects, private capital will stay away. We need more decentralization of decision-making and better project preparation at the state level. That's where the real bottleneck lies.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.