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Budget Wish List: Infra Allocation May Go Up Rs 60,000 Crore

Aviation, Railways, Roads, Logistics Sector need more attention in this Budget

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Roads, railways and the overall infrastructure sectors have been the focus of the Narendra Modi Government in its first five-year term. That is the reason why the overall spends on infrastructure sector may go up from Rs.5.97 lakh crore in 2018-19 to around Rs 6.60 lakh crore in the upcoming Budget to be presented on July 5. The infrastructure sector was one of the major focus areas in the FY19 interim budget and saw massive spending on roads, railways, water, irrigation, and urban infrastructure. Within infrastructure there are a number of specific sectors that have seen their outlay go up over the years during the first five-year tenure of the Modi Government.

Take for example the focus on railways in the past few year’s budget allocations. For FY16, the budget allocation for railways was around Rs 1 lakh crore. But by FY19 it jumped by nearly 50 per cent to Rs 1.48 lakh crore. In the interim budget presented by Piyush Goyal on February 1, railways were allocated around Rs 65,000 crore. The focus for railways has been improvement and expansion of its infrastructure. The Railways’ overall capital expenditure programme is of Rs 1,58,658 crore. The interim budget had put a target of Rs 2.16 lakh crore as gross receipts, a jump over the revised estimates of Rs 1.96 lakh crore in FY18-19. This target is likely to stay or increased marginally due to the speeding up of a number of trains in recent days. The upcoming budget may also see announcements on the introduction of more semi high speed trains across more routes as well as fast tracking station redevelopment programme for key metro cities.

For the Modi Government, it is the specific projects that needs to be executed in a time bound manner and therefore the allocations are made accordingly. For example the Bharatmala Project of connecting Highways across India, the Sagarmala Prjects of Port connectivity, or the Railway Station re-development programme and several more including interconnecting of river network to improve inland waterways development, or cleaning of river Ganga under the Namami Gange project, or the modernization of airports under the UDAN scheme. Not to leave the expansion of metro rail projects across state capitals.

Apart from plan outlays, the upcoming Budget on July 5 could also see announcements making it easier for reputed infra-based CPSEs to raise long-term funds says in the form of infrastructure bonds or tax-free bonds. ICRA expects the government to make an announcement on equity raising plans/or launch of the NHAI InvIT to fund the ambitious Bharatmala programme.

The logistics sector is looking for rationalisation of taxes in the forthcoming Budget besides fiscal incentives for in-depth adoption of digitisation and skill building in the sector. “The input credit norms for warehouse construction and operations needs to be relooked at," says a senior expert on the logistics sector. Experts say the logistics industry has enough potential for empowering economic growth and creating jobs. Therefore, it will not come as a surprise if the Budget focuses on the logistics sector, experts said. As per a JLL India report in 2019, the logistics and warehousing sector would absorb about 38 million square feet of space, which would be higher than the average annual demand of 32 mn sq ft in the last four years. Another report by Anarock Property Consultants reveal that the PE funds have altogether pumped in over $1 billion in logistics and warehousing sectors in the two years period between the first quarter of 2017 and 2019. In years before that this sector had not seen much investments.

With all eyes on the upcoming Union Budget, the Government should focus on not only allocation of funds, but also on setting up a road map for clearly outlining the private and government sectors' role in infrastructure creation and operations over the next year.

For the civil aviation sector, the industry is expecting some relief on the current high taxation on aviation turbine fuel or ATF which is among the highest in the world. Will the budget pave way for bringing the ATF and other related fuels under GST? Tax cuts on the growing Maintenance, Repair and Overhaul (MRO) industry is also the need of the hour, say aviation experts.

For FY19, the Finance Minister had allocated Rs 10,000 crore for the creation and augmentation of Telecom infrastructure. The upcoming budget may see some update and announcement on the work done so far and what more is required in the current financial year.


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Union budget 2019-20 aviation railways