Enhanced budgetary allocation of Rs 3.96 lakh crore to the infrastructure sector would boost order inflows and is positive for companies in the segment, ratings agency Icra said today. “Budget focus on infrastructure sees increase in allocation to most schemes; high execution targets is credit positive,” it said. It said the Central government has retained its focus on infrastructure development by increasing allocation towards the sector with focus on key segments like roads, railways, metro and irrigation.
“This, along with, promotion of affordable housing segment by granting the infrastructure status to such projects, will help the construction sector in further enhancing order inflows,” it said.
It said allocation of Rs 3.96 lakh crore to infrastructure sector in FY18, an increase of 13.5 per cent from FY17 budgetary allocation, will have a positive impact on infrastructure and construction companies.
There is a significant increase in allocation towards Pradhan Mantri Awas Yojna (PMAY), which was enhanced 45 per cent, it said. Allocation to Swachh Bharat Mission was increased by 44 per cent while Pradhan Mantri Krishi Sinchai Yojana saw an increase of 28 per cent, it added.
Icra said another major beneficiary was Metro projects which saw its allocation increase by 80 per cent over FY17 budgetary allocation. For railways, it said the increase in capital outlay is lower than expected given that it has set an ambitious capex target of Rs 8,56,000 crore during the five-year period 2015-19 (average of Rs 171,200 crore per year).
However, increased budgetary support and limited dependence on Internal and Extra Budgetary Resources (IEBR) will provide the railways greater flexibility for future capex, it said. The Budget has increased allocation for the Ministry of Railways (MoR) by 22 per cent over FY17 and the dependence on IEBR has been kept at the same level as the last fiscal. “As a result, the total capital outlay for Railways in FY 2018 is budgeted to increase by 8 per cent to Rs 131,000 crore over both FY 2017 Budget Estimates (BE) and Revised Estimates (RE),” it said.