Infrastructure gains pace in budget 2019
When the NarendraModi government assumed office four years and nine months ago, private investments in infrastructure was down to a trickle and bank credit to the sector was grinding to a halt. Investors and lenders had overestimated the near-term growth potential of the sector and the economy as a whole. Implementation issues—partly because of various regulatory hurdles and inflated costs/delays in land acquisition but also due to a rethinking on the part of private promoters—had stalled majority of the under-construction projects. Long gestation periods of the highways and power generation projects proved to be incompatible with the credit cycle of commercial banks.
The Modi government has managed to make some headway in easing the regulatory issues and land acquisition hurdles for highway projects. The terms of concession agreements have been relaxed and made more practical for highway and port projects—some found a moral hazard in such steps- and exit was made easier for private promoters to enable new investors to take over the stressed projects and impart a fresh momentum to PPP projects.
Rajaneesh Dasgupta, Director General, Association of Infrastructure Industry (India), “The focus of the government to build physical and social infrastructure with the core being the well-being of the citizen show the need for all stakeholders to come together and build India. We also welcome the pension for unorganized worker which includes the construction workers will go a long way in “Pride in Building India. This budget has something for everyone”
Ashwin Reddy, Managing Director, Aparna Enterprise Limited said, “Infrastructure and construction industry received notable sops during the interim budget which also benefits allied sectors like real estate. We were hoping for announcements on GST reduction for building material sector and flexible income tax incentives for the affordable housing category, nonetheless, it is time to wait and watch how the GST Council will reduce the burden on home buyers in the coming months.”
“We are happy to hear that the Government is in the process of implementing the various recommendations made by the Inter- Ministerial Committee towards reducing the import dependence on crude oil and natural gas. Urgent attention has to be directed towards transforming the system of bidding for exploration and changing from revenue sharing to the exploration programme for Category II and III basins. The steps taken by the Government are in positive light and will be important for the natural gas sector.” Shares Rajiv Menon, Managing Director, Black & Veatch India.