T his Year’s union Budget has struck a fine balance between fiscal prudence and providing growth boosters to the economy. It is a progressive Budget and is in line with the development priorities of the government. FM Arun Jaitley has made a strong attempt to pump prime the rural economy and infrastructure sector.
The government continues to boost the infrastructure sector, which is the backbone of the country’s overall development, with a record total allocation of R3.96 lakh crore for this sector. Stepped up Budget allocation to R64,000 crore for national highways in 2017-18 (against R56,000 crore the previous year) is good for the road sector, as the surface transport ministry intends to speed up implementation from 30 km per day to 40 km per day. Allocation of R27,000 crore for the Pradhan Mantri Gram Sadak Yojana (PMGSY) for rural roads is a particularly welcome move. The pace of construction of roads under PMGSY accelerated to 133 km per day in 2017 — as against 73 km per day in 2011-14 — which has assisted in building 1,40,000 km of roads in the last three years. In addition, the government has brought forward the target date to achieve complete rural connectivity through all-weather roads by three years, from 2022 and 2019, under PMGSY. Another notable move is the 2,000 km of coastal roads identified for development, which will facilitate better connectivity with ports and railway.
Other than the Budget, we understand that the ministry has received Cabinet approvals for monetisation of their current operating assets, which allow them to garner close to R75,000 crore that can be also utilised for further bidding of roads. At present, the ministry has been focussing on two major aspects — one is engineering procurement construction (EPC) and the other is hybrid annuity — and both are well taken by the industry in terms of the number of projects being bid and awarded.
The efforts of the government to have surplus liquidity in the banking system will help curb the borrowing cost and stimulate the credit flow, which in turn will benefit the sector at large. This apart, infrastructure status to affordable housing and reduction of income-tax to 25% for companies below R50 crore turnover is a big thumbs up.
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Overall, this year’s Union Budget adheres to the fiscal discipline, with emphasis on growth and development of the economy.
By Jayant Mhaiskar, Vice-Chairman & Managing Director, MEP Infrastructure Developers Ltd