Latest Updates On Construction Companies

Big infrastructure opportunities with NDA stepping into its second term

July 2019
Once again, the mood is Modi! And as the NDA regime steps into its second term, there is optimism about the economy, along with the key sectors of infrastructure, oil and gas and renewable energy, among others.

In a recent report titled Sectoral Development Prospects for NDA 2.0, ICRA lays emphasis on how the re-elected NDA regime can provide momentum to macroeconomic growth. According to the report, the macro indicators of the Indian economy have taken an unfavourable dip in terms of slowdown in GDP growth, moderation in consumption, liquidity tightness and contraction in agricultural and industrial output. This apart, the unemployment rate is at a 45-year high. Therefore, revival of economic growth will be of utmost priority for the new Government. With the focus also being on fiscal consolidation, it remains to be seen how this revival will be crafted. Other factors that may play spoilsport are inflation, worsened trade deficit and crude price volatility, which can disturb the long-term dynamics of India’s current account deficit. Amid these, the Government will have to boost infrastructure investment and private consumption, while maintaining fiscal discipline.

Undoubtedly, the Government’s focus on infrastructure is expected to continue. The past five years have witnessed a massive push towards Bharatmala, Sagarmala, inland waterways, Housing for All, AMRUT, smart cities, metro-rail and railways. And with the continuity in government, ICRA estimates a growth in the total budgetary allocation.

                                               Budgetary Allocation Estimate

Sector

Major capex plans

Expected capital outlay over five years

Railways

DFC, railways capex, bullet train, station modernisation

Rs 10-12 trillion

Roads and highways

60,000 km over the next five years

Rs 7-9 trillion

Urban infra

AMRUT, smart cities, metro/MRTS

Rs ~3 trillion

Ports

Sagarmala

Rs 2-3 trillion

Airport

~100 new airports

Rs ~2 trillion

Inland waterways

Development of national waterways, other related capex

Rs ~1 trillion

Source: ICRA


As Shubham Jain, Group Head & Vice-President - Corporate Ratings, ICRA, says in the recent report, “The next five years will see massive infrastructure build-up in India. The capital investment in the sector has been proposed at Rs 100 trillion over the next five years, a huge increase from the current level. Among key segments, transport infrastructure is expected to see a major jump with an estimated Rs 25-30 trillion of capital outlay over the next five years. Such an investment will provide tremendous long-term benefits for the Indian economy.” He mentions that construction companies are likely to be the major beneficiaries and will witness strong order inflows, estimated at Rs 15-18 trillion on the basis of these infrastructure capex plans.

SHRIYAL SETHUMADHAVAN