 "Industry hails infrastructure push through Gati Shakti, PPP in Budget")
Industry players on Tuesday hailed the announcements for the infrastructure sector in the Union Budget and said the proposal to fund infrastructure through 'Gati Shakti' and public private partnerships will mark the escalation of economic prosperity.
Finance Minister Nirmala Sitharaman on Tuesday presented the Union Budget 2022 in Parliament.
"One of the strongest parts of this Budget is the government's renewed commitment with its continued investment in strengthening the country's infrastructure. The proposal to fund infrastructure through PM Gati Shakti, Public Private Partnerships, etc. will mark the escalation of economic prosperity.
"Overall, the budget seems to have given a booster dose to facilitate faster economic growth of the nation; roads is definitely one of the prominent sectors to get deserved focus through adequate funding," IRB Infrastructure Developers Chairman & Managing Director Virendra D Mhaiskar said.
According to EY India Tax Partner Infrastructure Samir Kanabar said the key pillars of infrastructure i.e. NIP, NMP and PM Gati Shakti have been fuelled with energy to propel economic growth with an array of announcements relating to roads, railways and power among others which are indicative of expansionist mindset and sustainable development.
"Infrastructure gains momentum as Theory of Big Push gets into play," he said.
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The gross budgetary support towards capital expenditure has been increased significantly with the infrastructure sector being the key beneficiary, Rajeshwar Burla, Vice President and Group Head, Corporate Ratings, Icra said.
"The capital expenditure is budgeted to increase to Rs 7.5 trillion in FY2023, which is 35.4 per cent higher than Rs 5.5 trillion in FY2022 BE, and 24.4 per cent higher than Rs 6.0 trillion in FY2022 RE. This apart, the special assistance as loan to states for capital expenditure has been increased to Rs 1.0 trillion in FY2023 BE from Rs 15,000 trillion in FY2022 RE," Burla said.
Significant support to states is expected to revive the capex by state governments. This along with higher capex by the Centre is expected to support the order inflow for contractors, he said.
"The Union Budget has also proposed to allow use of surety bonds from insurance companies as a substitute for bank guarantees in government procurements.
"This will reduce the margin money/collateral requirement and consequently indirect costs for construction contractors. Further, provision for release of 75 per cent of running bills mandatorily within 10 days will support cash conversion cycle of contactors. Overall, these measures are positive for construction companies," Burla said.
According to Tata Projects Chief Strategy Officer Himanshu Chaturvedi, the main positive highlights of the Budget were emphasis on speedy dispute resolution and arbitration through international arbitration centre; E-bill system for procurements and quicker payments; implementation of surety bonds; infrastructure status to Data Centres for easier financing.
Besides, rationalisation of taxation for joint ventures; about 75,000 compliances eliminated & 1,486 union laws repealed to enhance ease of doing business; and tax on project imports were some of the other highlights.
These initiatives will ensure that payments are disbursed faster and provide a fillip to infrastructure companies so that they can focus on doing their core work creating world-class infrastructure to support India's growth story, he said.
"In addition, we also welcome the government's various announcements on the infrastructure front such as...100 cargo terminals in three years; highway expansion by 25000 kms; four multi-modal national parks; standardization of metro systems including civil structures; and four pilot projects for setting up coal gasification," Chaturvedi said.
Lastly, raising capex target to Rs 7.50 lakh crore is an excellent move, he added.