Budget expectations in a nutshell: s consumption, stimulate investment; be popular, not populist; & maintain fiscal deficit discipline.
First half of NDA term was high on creative energy for a slew of initiatives on infra. Balance half must shift gear to rigorous execution.
Budget 2017: Will the spotlight stay on infrastructure?
The government had identified infrastructure as one of the key sectors for growth and had allocated R2,21,246 crore in the previous Budget. In the Union Budget 2017, industry experts are hopeful that the momentum will be maintained by focusing on key components such as roads, energy, inland waterways and rural housing, among others.
Along with roads & renewables, power transmission attractive opportunity for pvt sector to invest. CEA estimates R2.6 lac crs till 2022.
Scope for new investment in power sector
According to the Central Electricity Authority, investments worth R1.6 lakh crore would come from the states and the balance R1 lakh crore from the Power Grid Corporation. It has estimated inter-regional capacity addition during the 13th Plan (2017-22), at 45,700 MW.
Reviving investment BIG challenge. CMIE capex data shows new investment proposals in Q3 2016 fell to their lowest level since June 2004.
Investments hit rock bottom
The Centre For Monitoring Indian Economy (CMIE) has reported that new investment proposals fell sharply to R1.25 trillion from the average R2.36 trillion worth of new investments seen per quarter. Only 404 new projects were announced during this period, which is the lowest in over a decade.
Does not do any good to d cause of industrialisation to have 4842 hectares of land acquired from farmers for SEZs still lying unutilized.
The Supreme Court has directed the Centre and several state governments to submit their response to a PIL seeking return of 90% of 4,842 hectares of land that were acquired from farmers for setting up of Special Economic Zones, and are currently lying unutilised.
Govt shifts line of attack on stressed assets. From ‘haircut & change of Promoter’ it now pushes for PSUs to take over and run them.
Stress on rehabilitating stressed assets
It is clear now that banks are struggling to clean up infrastructure non-performing assets (NPAs) on their books. The government is encouraging PSUs to consider taking over many of these stressed assets in conjunction with banks. This is a clear shift in strategy from the earlier expectations of finding new promoters to take over these assets and refinance them.
Constrn Equip Mfger’s Assocn confirm that pick up in sales at 41% over previous year is primarily due to Mr Gadkari’s road sector push.
Hitting the fast track
In 2016, construction equipment manufacturers recorded highest sales over the last four years, according to the Indian Construction Equipment Manufacturers’ Association. Overall volumes grew to an estimated 52,100 units in 2016, as compared to 36,800 units in the previous year.
Why high-speed rail? Because 250,000 passengers fly domestically daily; more than the number in upper class railway coaches.
Need for speed
The Indian Railways has identified 11 corridors for running trains at a “semi-high speed” of 160 km per hour by 2019, and sought sanction of R22,000 crore from the finance ministry.
How times change. UAE, a leading oil exporter, now plans to invest $163 billion in Renewables.
UAE puts its petro-dollars on renewables
The major oil-producing United Arab Emirates (UAE) is looking at generating half of its power needs from renewables by 2050. While gas will contribute 38% of its energy, 12% would be from cleaner fossil fuels and 6% from nuclear energy.
—Vinayak Chatterjee is Chairman of Feedback Infra
His Twitter handle: @Infra_VinayakCh
A weekly selection of the author’s tweets—
with a brief backgrounder—in the infra space, by Adite Banerjie