The infrastructure sector does indeed have reason to feel more than satisfied with the huge emphasis given to it in the 2017-18 Budget. The allocation of R3.96 lakh crore, which is 18% of the total budgetary outlay of R21.47 lakh crore is as large as the sector could have hoped for. Equally important, a bulk of allocation is for projects and programmes, which have demonstrated good traction—such as highways, rural roads, railways, ports, renewables, rural electrification and irrigation.
The finance minister, Arun Jaitley’s Budget speech also offers new thinking to solve old and complex problems. First, in airports, there is monetisation of city-side lands as well as operating contracts for the private sector. Second, a new Metro Rail Act to provide for more private participation in this fast growing sector. Third, infrastructure status for affordable housing was announced. Fourth, a much-needed R1 lakh crore railway safety fund. Fifth, there was also the long-asked-for answer to the issue of dispute resolution for PPP projects, by a commitment to move ahead with an amendment to the Arbitration and Conciliation Act.
This was the first year of the merger of the Rail Budget. The main speech carried very little data that rail analysts have been used to receiving like the operating ratio, sources of funding beyond the budget, organisation transformation and restructuring plans, and the like. It is hoped that the supplementary papers of the budget will carry far more detail on the financial health of the railways as well as specific initiatives for the organisation’s transformation and revival.
There were a bunch of issues that were left unaddressed. Chief among them is the mounting non-performing assets of banks and the related stressed conditions of balance-sheets of infra players. The Economic Survey carried the path-breaking suggestions of a new institution, called PARA (Public Sector Asset Rehabilitation Agency), to professionally handle this political hot potato. However, the Budget speech did not allude to this difficult area. On the PPP front also, there was not much on revival steps—whether it was the implementation of the Kelkar Committee Report on reviving private sector investments or the “grim situation” facing private sector power producers, which the chief economic adviser has also found fit to draw the nation’s attention.
Major initiatives of earlier years like how the National Investment and Infrastructure Fund (NIIF) has performed or the progress of Smart Cities were also not referred to. These are also signature projects of this government—and the budget speech would have been a good occasion to give infrastructure watchers an update.
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On the issue of public expenditure in infra, a major step had been contemplated: asset recycling, which is the sale of brownfield operating utilities owned by the state to long-term foreign institutional investors, who are waiting for such offerings. This did not find focus as a potential major way to stimulate off-budget funding by recycling the funds so received into new public infra projects.
Of course, all this does not take away from the budget’s high level of allocation, which indeed reflects the high priority that this government gives to the infra sector, especially for its ability to create jobs and stimulate the agrarian economy. Overall, it is an excellent carry-on budget for the infrastructure sector. No wonder therefore, by late afternoon, the Sensex cheered the high infrastructure spends and its multiplier effect on the economy by surging nearly 500 points.