Economic Survey 2025: Infra investment must increase over next 20 years. It is time for the private sector to step up

India needs to continue stepping up infrastructure investment over the next two decades to sustain a high growth rate, said the Economic Survey 2024-25 on 31 January. 

It is time for the private sector to take up the investment baton, with the government supplementing its own efforts with wholehearted acceptance of the need for public-private partnerships (PPPs) in the country's infrastructure sector, the survey added.

The survey, by India's chief economic advisor V. Anantha Nageswaran, also said coordinated action was required from all stakeholders—governments at different tiers, financial market players, project management experts and planners, and the private sector—to step up private participation, which has been lagging behind in many core sectors.

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“Capacities to conceptualize projects, develop sector-specific innovative strategies for execution, and develop high-expertise areas such as risk and revenue sharing, contract management, conflict resolution and project closure need to improve substantially," it said.

The Economic Survey 2025 suggested a host of measures to accelerate infrastructure investment, including building integrated multi-modal transport, coupled with the modernization of existing physical assets, which would improve efficiency and last-mile connectivity.

The survey suggested that private participation should increase in many critical infrastructure sectors in many areas, including programme and project planning, financing, construction, maintenance, monetization and impact assessment.

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The survey noted that private enterprise uptake is limited in many core sectors despite PPP models—build-operate-transfer (toll and annuity), design-build-finance-operate-transfer (hybrid annuity model), and toll-operate-transfer—debottlenecking and facilitatory mechanisms—the National Infrastructure Pipeline, National Monetisation Pipeline, and the PM-Gati Sakti—and financial market reforms. 

The survey said disaster-resilient urbanization, public transport, preservation and upkeep of heritage sites, monuments, and tourist destinations, as well as rural public infrastructure, including connectivity, call for greater attention. It added that such investment should be made in line with the country’s net-zero commitments, which entails added stress on creating renewable energy capacities.

The government has placed infrastructure development at the centre of its fiscal and public policy agenda. The Centre's capital expenditure for 2024-25 has been budgeted at about 3.3X the capex for 2019-20. 

In the March quarter, the constraints on new approvals and spending during the general elections, coupled with a heavy monsoon in many regions, affected the progress of the infrastructure spending. However, the pace picked up between July and November 2024, it said.

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The survey said the progress of physical indicators in the current year mirrors the financial progress. “The addition to the rolling stock of railways, port handling capacity, and power and transformation capacity saw a year-on-year improvement during 2024-25. The addition to the length of highways, roads and railway lines has been modestly lower. On the whole, seen against the background of the constraints that prevailed in Q1FY25, infrastructure build-up in the current year has stayed on course.”

A recent Reserve Bank of India (RBI) report on private investments also indicates increased investment intentions for 2024-25 and 2025-26, the survey said. 

The RBI’s report highlighted that investment intentions increased to ₹2.45 trillion for 2024-25, compared to ₹1.6 trillion for 2023-24.

Furthermore, a private sector analysis of capital goods companies cited in the survey reveals a sharp increase in order books, growing by 23.6% in 2023-24 compared to a compound annual growth rate (CAGR) of 4.5% over the previous four years. 

This growth trend continued into H1FY25, with a 10.3% increase from the end of 2023-24. This augurs well for infrastructure growth going ahead as government efforts on higher capex get supplemented by increased investment by the private sector, as also suggested by the survey.