India's additional spending could raise GDP growth rate to 10%

The combined effects of the rise in India's infrastructure investment could generate USD50bn in additional value-added 1.4% of nominal GDP by FY20, under an optimistic scenario that assumes full realisation of the spending. 

One of the scenarios is based on a more realistic 75% completion rate of infrastructure spending by 2020. At this rate of realisation, USD44bn (1.2% of nominal GDP) in value-added could be created by FY20, which could quicken the pace of real GDP growth by about 1.4pp and push real GDP growth very close to 10% by FY20.

"Even without a big infrastructure spending boost,the economy is expected to expand by a respectable 8.1 % pa on average during the next five years. In 75% potential scenario, increased investment in the foundations of a stronger economy, ie, power availability, logistics and connectivity, and urban infrastructure, would have the biggest impact, as this should also facilitate higher private investment in other sectors of the economy, particularly FDI", says Barclays.