States to join Viksit Bharat financing working groups

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States Viksit Bharat financing

Highlights

States will be included in Viksit Bharat financing working groups, which will identify sector-specific infrastructure needs and prepare reports.
According to former Finance Secretary Sudhir Srivastava, states' total expenditure in 2024 will be around Rs 64 lakh crore, with capital expenditure of Rs 11 lakh crore.
N K Singh recommended making better use of multilateral funding capacity, noting that India's cost of capital of 10-12.5 percent is higher than in ASEAN countries.

This article was translated from the original. Read the original version by our correspondent here.

State participation in the financing framework

According to Forbes India, Department of Economic Affairs Secretary Anuradha Thakur said on Friday that states will be made members of working groups tasked with taking forward the outcomes of the conference of finance ministries and Union Territories with legislatures. She said working groups have been identified under the guidance of moderators for each thematic session, and their reports will outline sector-specific needs for Viksit Bharat.

The two-day conference at Bharat Mandapam in New Delhi includes Union Finance Minister Nirmala Sitharaman, state chief ministers, finance ministers and finance secretaries. It is discussing ways to mobilise resources for the 2047 goal through a blend of public and private finance in areas such as agriculture, energy transition and new technologies.

Thakur said partnerships in policy, the use of financial resources and, most importantly, implementation can decisively advance this goal. According to her, needs on this scale cannot be met through government budgets alone, and private-sector financing will have to play a significant role.

Private capital, multilateral funding and states' fiscal capacity

N K Singh recommended creating an empowered apex group to review the outcomes of the working groups every six months. He said working groups should work jointly where agendas overlap, such as a combined review of agricultural power subsidies and distribution losses in agriculture and energy.

On private capital, Singh said the constraint is not a lack of resources but a shortage of bankable projects. He advocated independent assessments of the project pipeline, better risk-sharing and wider use of frameworks such as the Hybrid Annuity Model, while noting that India's cost of capital of 10 to 12.5 percent is higher than the 6 to 10 percent levels in Malaysia, Thailand, Vietnam and Indonesia.

He also stressed that states should mobilise more resources from multilateral lenders, including the World Bank. Singh said multilateral development banks have unused lending capacity, and hybrid capital can enable loan support of up to six dollars for every dollar over a decade.

A presentation by former Maharashtra Finance Secretary Sudhir Srivastava showed that a large part of the Viksit Bharat agenda falls under the jurisdiction of states. States are estimated to spend around Rs 64 lakh crore this year, compared with Rs 55 lakh crore by the Centre; they have provided for capital expenditure of about Rs 11 lakh crore, or 2.4 percent of GSDP, with a target of raising it to 3 percent by 2031-32.

The presentation also highlighted wide disparities in states' fiscal capacity. Per-capita own tax revenue ranges from around Rs 5,000 to Rs 38,000, while outstanding liabilities range from about 19 percent to 46 percent of GSDP, further underscoring the need for state-specific strategies to finance Viksit Bharat.

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