Finance Minister Nirmala Sitharaman, in her eighth consecutive Budget announcement, emphasised boosting infrastructure development. She said that each infrastructure-related ministry will draft a three-year pipeline of projects that can be implemented through Public-Private Partnership (PPP) mode.
The move aligns with the Economic Survey 2024-25, which called for increased private sector participation in infrastructure development.
“We need to ensure greater private participation in infrastructure by enhancing their capacity to conceptualise projects and their confidence in risk and revenue-sharing mechanisms, contract management, conflict resolution, and project closure," the Survey said.
It highlighted that private sector involvement could accelerate critical infrastructure sectors in areas such as project planning, financing, construction, maintenance, monetisation and impact assessment.
Official data released earlier showed that the output of eight key infrastructure sectors slowed to 4% in December 2024, compared to 5.1% a year ago. Monthly growth was also lower than the 4.4% expansion recorded in November 2024.
A Nudge For States
Sitharaman also announced that states will be encouraged to develop PPP-based infrastructure projects and can seek support from the India Infrastructure Project Development Fund (IIPDF) scheme for project preparation.
She proposed an outlay of Rs 1.5 lakh crore in the form of a 50-year interest-free loan to support states’ capital expenditure and incentivise reforms.
Finance Minister Nirmala Sitharaman announced several infrastructure projects, starting with the Jal Jeevan Mission, which she claimed has provided potable tap water to 15 crore rural households since 2019. The project has now been extended until 2028 with an increased budget.
The FM said that the PM Gati Shakti portal will provide data access to the private sector, aiding project planning under public-private partnerships.
Urban reforms were also highlighted in Budget 2025, with the government incentivising improvements in governance, municipal services, and urban planning.
A Rs 1 lakh crore Urban Challenge Fund will be set up to support projects under “Cities as Growth Hubs,” creative urban redevelopment, and water and sanitation initiatives. The fund will cover up to 25% of project costs, with the remaining amount financed through bonds, bank loans, or PPPs.
In the power sector, the Budget announced incentives for states to reform electricity distribution and enhance intra-state transmission. Sitharaman stated that states implementing these reforms will be allowed additional borrowing of 0.5% of their GSDP.
For maritime and shipbuilding, the Finance Minister announced a revamped Shipbuilding Financial Assistance Policy to address cost disadvantages. A Rs 25,000 crore Maritime Development Fund will also be created to provide long-term financing for the sector.
In aviation, the UDAN scheme has been expanded to connect 120 new destinations, supporting regional connectivity for 4 crore passengers over the next decade.
In line with expectations ahead of the Bihar state elections, the Budget also announced the development of a new Greenfield airport in the state. Additionally, the Western Koshi Canal Project will receive funding to benefit over 50,000 hectares of farmland in Bihar.
Meanwhile, SWAMIH Fund 2, with a Rs 15,000 crore corpus, has been announced to support the completion of 1 lakh additional housing units, benefiting middle-class homebuyers.
