A MOMENT TO REJOICE FOR INFRASTRUCTURE SECTOR
In line with announcements made over the last couple of years by FM, key highlight and a moment to rejoice for Infrastructure sector was the prolific increase in the capital expenditure outlay. With the proposed 33% increase compared to last year the Union Budget was focussed on unleashing the capex cycle. This would mean effective capital outlay of Rs. 13.7 Lac Crores which is equal to an impressive 4.5% of GDP. This certainly exceeds the expectation from Infrastructure industry. Given the multiplier effect impact of the capital outlay on the overall economic growth as well as its contribution towards generating significant employment opportunities, FM proposed more long-term loans to states for capital expenditure, increasing the 50-year interest free loan to states to Rs 1.3 lac crore, 30 percent more than what was allocated for 2022-23. The capital outlay announcements include Rs. 2.4 Lac Crores for Railways and identifying 100 critical transportation projects to improve first mile and last mile connectivity apart from augmenting regional air connectivity with a reorientation of focus towards enhancing urban infrastructure projects. Recognising the funding requirements specifically in the Urban Infrastructure sector and for municipal services which is expected to cross USD 840 Billion over the next 15 years the budget speech further emphasised on the need of raising long term capital through Municipal bonds and setting up a new fund, UIDF. This fund shall catalyse the investments required in urban infrastructure projects specifically in tier 2 and tier 3 cities. The UIDF shall receive Rs. 10,000 Crores per annum from the centre seeking further support from the states. Special focus on energy transition with a dedicated corpus of Rs. 35,000 Crores, prioritising evacuation off take of 13 GW renewable energy capacity being developed at Ladak and a dedicated corpus for enhancing green hydrogen production targeted to reach 5 MMT by 2030 were other key highlights in line with governments focus to achieve the net zero emission commitments by 2070.
Tags : Infrastructure Sandeep Upadhyay Managing Director Infrastructure Advisory Centrum Capital