India's infrastructure spending ramp up likely

India Prime minister Narendra Modi led administration is laying out its key policy areas. A push for greater urbanisation in India is at the heart of the government's growth model. 

Urbanisation is an 'opportunity' rather than a threat, the government has outlined a structured approach to increase the share of the urban population through greater connectivity, universal access to basic facilities, and boosting manufacturing and services activity. The government, enjoying a fiscal windfall in the wake of lower oil prices, is prioritising infrastructure investment and has outlined five key areas, Urbanisation, Power and coal, Highways, Railways, Ports and freight corridors. 

In the next five years, the government could spend more than INR12trn (USD190bn, or 8.5% of GDP) in the above five areas above levels based on past trends. If executed successfully, the government will be able to 'crowd-in' private investment, and create a long term boost to the economy's growth potential. 

"Without these extra initiatives, the government would only have channelled roughly 1% of GDP per annum towards investments in these sectors", says Barclays.