Construction companies are expected to get a significant push from the increased capital outlay and execution targets set for key infrastructure sectors in Budget 2018-19, ratings agency ICRA said today.
With funding support from increased budgetary allocation, and higher Internal and Extra Budgetary Resources(IEBR) including debt funding from institutions like LIC, EPFO, most of the infrastructure segments are expected to witness the increased pace of contract awarding and execution in 2018-19, it said in a statement.
It said this will improve order inflows and revenues of construction companies. It added that the proposal to lower the rating threshold for investment in corporate bonds will channelise much needed long-term capital from pension and insurance funds into the infrastructure sector.
Shubham Jain, Vice-President and Sector-Head, Corporate Ratings, ICRA said: "A significant part of this capex will be related to the construction sector business. As per our estimates, the proposed infrastructure capital outlay plan could result in a construction business of up to Rs 3.3 lakh crore in 2018-19 - and will be a key driver for construction activities in the country."