What’s your take on Budget 2018, especially for the infrastructure segment or your industry sector?
Infrastructure has been at the forefront of this government agenda and they realise that is key to any developing economy. Therefore, we have seen an increased spend in infrastructure of 5.67 lakh crore. The major focus with MSP and rural sector also needs to be supplemented with infrastructure to aid farmers to sell their produce at the MSP. Thus, a lot of focus on rural roads and connectivity has been given in the budget. Also, with increased mechanization we will see a lot of demand of equipment which has witnessed strong growth over the last few quarters. This directly impacts our industry where we are seeing people applying exponential growth for equipment financing. Users are looking to sell old equipment for new ones and we are witnessing realizations going up as demand for new and used equipment has grown significantly. There are cases where manufacturers have now an order book where they cannot deliver the equipment required. We see that financing such a spend and create capacity in the industry will be a bigger challenge for the government to get projects delivered on time.
Key Hits and Misses for the infrastructure segment
Key Hits-
- Increased in infrastructure spend.
- Relaxation of threshold from AA to A ratings for investment in infrastructure companies for pension and insurance companies will aid financing.
- Much needed boost to railway infrastructure which had been deteriorating and push for ancillary infrastructure in terms of CCTVs and WIFIs to boost connectivity and security.
- Focus on environmental issues to take care of pollution issues and sanitation through increased spending.
Key Misses-
- No incentive or increased allocation to Power Sector or initiative to resolve the discom issues with mounting generation costs.
- Renewable Power like solar and wind have recently suffered to due to impact of GST and nothing was done to address the issue.
- No infrastructure status for Real Estate Sector.
Possible impact of the announced measures for the Infrastructure sector post Budget 2018.
The budget this time around has actually become a non event as there was so much activity and reforms throughout the year. The infrastructure spend from the government was seen taking momentum from April last year and has been growing rapidly. The sectors in infrastructure which were stagnant for sometime, like railways have seen a great push even the roads sector which has been doing well has been given more impetus. All these will give a huge boost to demand for manpower, equipment and capacity building in the sector. This would lead to creation of new entrepreneurs who can scale up quickly and get access to finance. We are seeing a new generation of entrepreneurs grabbing the opportunity like it happened in the early 2000s when a lot of EPC and focused infrastructure spend was happening. With use of technology we see that today easier and efficient accessibility to resources will aid new entrepreneurs to deliver world class projects on time.
@EPC World Media
