The infrastructure sector expects continued thrust from the government towards revival of the investment cycle in the form of a further increase in budgetary allocations with focus on roads, railways and urban infrastructure.
The importance of the infrastructure sector in the overall progress of the economy is critical. The government has given considerable impetus to this sector including in the last two budgets, where significant allocation to this sector was committed. Owing to this focus, the earthmoving and construction equipment industry witnessed a noteworthy revival last year.
While there is a wish list of reforms that the sector deserves, a few points need to be considered on priority. At the outset, GST implementation is key for ease in movement of goods in the domestic market, the benefits of which are well discussed in the recent past.
Despite the variations in investment quantum across cities, there are some common threads which run through most of the Smart City plans. The most important one is around financing. Even after considering Government of India and counterpart funding from the state governments as well as the municipality, for most cities there exists a financing gap of at least 20 per cent of the total investment plan, which would need to be met through private participation.
Directly or indirectly, the real estate sector contributes to over 15 per cent of India’s GDP. It has been asking for industry status for quite some time now. In its absence, developers are forced to borrow at high interest rates and comply with a stringent evaluation process. Unavailability of funds at a reasonable rate of interest delays the construction process and increases the final cost of homes, negatively impacting the end consumer.
Post the interim Budget, where a number of positive announcements were made, the macroeconomic indicators have improved with inflation and industrial growth showing positive signals. The coming Budget is expected to continue with positive policy changes in order to improve business environment and give strong push to growth. Government has been moving steadily on Smart Cities and the Budget will have a lot of announcements on this front including the broader contours.