Union Minister for Finance, Corporate Affairs, Railways and Coal, Piyush Goyal presented an Interim Budget for FY2019-20 recently. The revised capital outlay (budgetary allocation plus internal and extra budgetary resources, or IEBR1) for infrastructure is 11 per cent higher than the budget estimate (BE), with the civil aviation and power segments logging the highest achievement ratios, according to a report issued by CRISIL. While this is good, there is a possibility that the actual spend could turn out to be lower as was the case in fiscal 2018, where it was 10 per cent lower than the revised estimate (RE).

The total capital outlay for infrastructure in fiscal 2020 is Rs 4.7 trillion, a meagre 5 per cent increase versus the fiscal 2019 RE and 16 per cent higher than the fiscal 2019 BE. Among infrastructure segments, railways and roads are the biggest beneficiaries for fiscal 2020, accounting for two-thirds of the investment outlay.

However, CRISIL’s detailed analysis suggests that the infrastructure sector will need additional funds. For instance, the railways will miss the Rs 8.5 trillion capex target over fiscals 2016 to 2020, as the overall capex during this period is projected close to Rs 6.5 trillion. Also, budgetary support to the NHAI has fallen marginally, though the increase in IEBR supports outlay growth in fiscal 2020 versus the fiscal 2019 RE. The analysis expects NHAI execution to grow 15 per cent to 4,300 km in fiscal 2020 but a marginal fall in budgetary support will imply an increase in its dependence on borrowings.

According to Amish Mehta, COO, CRISIL, “Execution in infrastructure has been splendid. The revised capital outlay (budgetary allocation + internal and extra budgetary resources) for infrastructure for this fiscal is 11 per cent higher versus the budget estimate. However, a note of caution is warranted as actual expenditure this fiscal fell short by 10 per cent compared to the revised estimate then presented.”

Also, extension of income tax benefits to affordable housing projects under Section 80-IBA for one more year—till March 31, 2020—has been proposed in the housing sector. “In real estate, the relaxation on holding period of unsold inventory for taxation of notional rental income to two years would provide marginal relief to developers under stress because of tight liquidity and weak absorption,” he adds.