The finance minister has used the positive macroeconomic profile of the country to his advantage while striking the balance between expanding the spend on focus areas and garnering the requisite resource base. Infra spending is one of the key elements of India’s investment story, and Budget FY18 did well to retain the focus on the sector with a host of positive announcements.
In transportation infrastructure, higher capex is proposed in railways to add new lines, redevelop stations and improve safety. New metro rail policy is expected to harness the potential that metros hold in improving the country’s transport infra. Road project awards and execution could see a pick-up with availability of a higher corpus of about R65,000 crore. PPP in airport O&M could improve efficiency of the sector, with players not requiring to invest huge sums of capital upfront.
Going digital continued to be a distinct theme in the Budget. The government has allotted R10,000 crore for the Bharat Net project, which aims to create seamless yet affordable broadband connectivity by laying optic fibre cables throughout the country. Last mile connectivity to citizens is proposed to be provided by creating Wi-Fi hotspots. The vision of Digital India could provide the push for new-age areas like Smart Cities.
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The real estate sector, which has seen a sluggish environment in the wake of demonetisation, has received a much-needed relief. Conferring “infrastructure status” on affordable housing will give the sector access to flexible and low cost funding options, apart from profit linked tax incentives. While the Budget is high on intent and focuses on the right areas, efficient follow through implementation is crucial for achieving the targeted outcomes.