It is an oasis in the desert, investors say. The Indian infrastructure space is considered an engine of growth by investors, big or small. Over the past few years, the Indian government has shown an inclination to spend more on boosting the infrastructure across the country. That is reflected in significantly high capital expenditure. As the country gets over the COVID-19 setback, the government has pushed up the momentum in the spending on infrastructure.
In 2022-23, over 7,555 new projects were initiated, and the total capital expenditure from private investments and government was estimated at Rs 21,14,773 crore, according to one media report. That is much higher than Rs 13,80,540 crore in the year-ago period.
According to government data, the Foreign Direct Investment in the infrastructure sector is estimated at over $28bn in three months to June 2022.
When governments and large private sector companies spend money on building physical infrastructure like roads and highways, bridges and airports, many investment opportunities are created for big and small businesses. The Indian government proposes to spend $100bn on building the infrastructure. However, mere government spending is not enough. There is a need for the private sector and foreign investors to participate too. The government has created a mechanism to award contracts quickly.
From an investment standpoint, you may need to identify a group of stocks that can help you ride the infrastructure boom in India. The upcoming Budget for 2023-24 is expected to boost both rural and urban infrastructure.
According to another report from the World Bank, India’s urban infrastructure needs are set to cross $840 bn over the next 15 years.
Larsen and Toubro, one of the biggest engineering and construction companies, has performed better than the broader market. It is one of the biggest contractors in urban infrastructure. It is at the forefront of building metro lines or major roads and bridges.
The Nifty Infrastructure index has more than doubled in just three years since the bottom of March 2020. There is an air of anticipation among investors. The rally in these stocks that began at the bottom of March 2020 peaked in October 2021. Since then, the Nifty Infrastructure index has remained stagnant. It is currently trading at the lowest level since October 2022. However, considering the increased focus on the infrastructure sector, there is a good chance for companies looking to ride India’s infrastructure boom to boost business.
You need to pick the right businesses to invest in. You can choose a basket of stocks to spread your risk or invest through an exchange-traded fund. You can also buy Real Estate Investment Trusts (REITs) or Infrastructure Investment Trusts. Alphaniti can help you identify the correct long-term stories that ride on India’s infrastructure boom.
Rise in government capital spending pushes investments up by 53% – The Hindu
India’s Urban Infrastructure Needs to Cross $840 Billion Over Next 15 Years: New World Bank Report
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