Big Push To Infrastructure

Money begets money. Will the Rs 4 trillion budgetary push to infrastructure attract global investors?

- Ashish Sinha

ON 1 FEBRUARY, FINANCE MINISTER Arun Jaitley announced government’s outlay of Rs 396,135 crore in ‘creating and upgrading’ new integrated infrastructure paradigm in 2017-18. Of this amount, Rs 241,387 crore is allocated for roads, railways and ports. For the aviation sector, the FM proposed amendment in the Airports Authority of India Act that will help monetise surplus land for the development of airports and related infrastructure. This means, more work and orders to companies operating in sectors such as steel, cement, construction, real estate, roads, railways and aviation. “An effective multi-modal transportation system is important for a competitive economy,” said Jaitley.

However, for a speedier development of highways, ports, airports and railways, the public-private-partnership (PPP) route needs to be strengthened. In 2015, the Kelkar Committee suggested overhauling of the PPP framework in India through measures such as funding from hybrid models, adoption of international best practices, allowing for the renegotiation of contracts, and discouraging Swiss challenge method in the procurement process. The Budget has remained silent on these crucial aspects, leaving it to the respective ministries and their ministers to take up the issues during the course of the next financial year.

The status of infrastructure to affordable housing in this Budget, however, has made it easier for the developers to raise funding. This will lead to rise in demand for affordable housing which in turn will boost demand for cement as the housing sector alone consumes over one-third of the cement supply. Push to Pradhan Mantri Awas Yojana and Pradhan Mantri Gram Sadak Yojana (PMGSY), both getting higher allocation, will help India Inc. in a big way.

Push to Connectivity