1. Budget 2018 impact on Roads

Budget 2018 impact on Roads

Budget 2018: The total budgetary allocations (including PBFF, CRF and GBS) to fund the ambitious highway development programme (including Bharatmala) are estimated at Rs 3,43,045 crore over FY19-22.

By: | Published: February 2, 2018 4:11 AM
Budget 2018: The total budgetary allocations (including PBFF, CRF and GBS) to fund the ambitious highway development programme (including Bharatmala) are estimated at Rs 3,43,045 crore over FY19-22.(Image: IE) Budget 2018: The total budgetary allocations (including PBFF, CRF and GBS) to fund the ambitious highway development programme (including Bharatmala) are estimated at Rs 3,43,045 crore over FY19-22.(Image: IE)

Budget 2018: The total budgetary allocations (including PBFF, CRF and GBS) to fund the ambitious highway development programme (including Bharatmala) are estimated at Rs 3,43,045 crore over FY19-22. Therefore, starting this Budget 2018, the allocation to the road ministry was expected to increase substantially. However, the increase in the budgetary allocation (excluding PMGSY) has been nominal at 8.7%, from Rs 64,900 crore to Rs 70,544 crore. Most of the Bharatmala programme is expected to be implemented through the NHAI; therefore, to bridge the shortfall in budgetary allocations, the NHAI is expected to raise funds by monetising more assets through the toll-operate-transfer and Infrastructure Investment Trust routes (by transferring mature assets to SPVs).

Watch: For Senior Citizens, Exemption Of Interest Income On Deposits Raised To Rs. 50,000

The thrust on PMGSY continued through the advancement of the completion target to 2019; allocation to PMGSY remained at Rs 19,000 crore – the same as in FY2018. This is expected to bolster the order-book of medium-sized road construction companies over the next two years. Further, Phase-III of PMGSY is planned to be launched to connect hospitals and schools with major link routes in the interiors of villages. Deepening of bond markets is required to support long-term infrastructure financing, especially given the twin challenges faced by commercial banks: asset-liability management and increasing share of stressed assets.

The proposal to relax the rating threshold (from AA to A) is a positive as it would encourage more participation from domestic insurance companies and pension funds in the infrastructure sector.

Impact: Neutral K

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