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Infra Sector Gets Top Priority In Budget

Jaitley termed the infrastructure sector as the “growth driver of economy” and accordingly went on to make almost an “all-time high" allocation to rail and road sectors

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It will not be an exaggeration that the infrastructure sector has remained the main focus area for finance minister Arun Jaitley while presenting his fifth full budget for 2018-19. During his budget speech, Jaitley termed the infrastructure sector as the “growth driver of economy” and accordingly went on to make almost an “all-time high" allocation to rail and road sectors.

Let's take the railway sector, the budget for which was merged with the Union Budget since last year. The capital expenditure of the Railways for 2018-19 has been pegged at Rs 1,48,528 crore. The focus area clearly outlined at creating more capacity which involves 18,000 km of line doubling, third and fourth line works and 5,000-km of gauge conversion. This budget envisages the shift of entire railway network to broad gauge. The budget also calls for expansion of electrification work to 4,000 km. Indian Railways will be procuring 12,000 wagons, 5,160 coaches and approximately 700 locomotives during 2018-19. The Indian Railways will also be undertaking 3,600 km of maintenance and track renewal. The Railways will also be taking to use of technology like ‘‘Fog Safe’’ and ‘‘Train Protection and Warning System’’ to prevent accidents. Besides, 4,267 unmanned level crossings in the broad gauge network would be removed over the next two years to eliminate possibility of road-rail collisions, said the finance minister in his budget speech. Jaitley also announced redevelopment of 600 major railway stations by Indian Railway Station Development Co. Ltd. and declared that all stations with over 25,000 footfall per day would be provided with escalators. Subsequently, he said all railway stations and trains will also be provided with wi-fi and CCTVs.

The finance minister has also informed that 90 kilometers of double line tracks are being added to Mumbai’s transport system at a cost of over Rs.11,000 crore. 150 kilometers of additional suburban network is being planned at a cost of over Rs.40,000 crore, including elevated corridors on some sections. In Bengaluru, a suburban network of approximately 160 kilometers at an estimated cost of Rs.17,000 crore is being planned to cater to the growth of the metropolis.

Developing Roads
Now lets look at the roads infrastructure. Right at the begining of his budget speech, finance minister noted that India needed investments over Rs 50 lakh crore in infrastructure to “increase growth of GDP, connect and integrate the nation with a network of roads, airports, railways, ports and inland waterways and to provide good quality services.”  Jaitley also noted that the government would be enhancing public investment as the year progresses. For road infrastructure, the finance minister said the Bharatmala Pariyojana had been approved for providing connectivity to interior and backward areas and borders of the country by developing about 35,000 km of roads in phase-I at an estimated cost of Rs 5,35,000 crore. He said the government was also confident of completing 9,000-km length of national highways during 2017-18.

In the Road sector, the recently approved Bharatmala Pariyojana aims to develop about 35,000 km of highways at a cost of Rs. 5,35,000 crore in Phase I. The National Highways Authority of India (NHI) will consider organizing its road assets into Special Purpose Vehicles and use innovative monetizing structures like Toll, Operate and Transfer (TOT) and Infrastructure Investment Funds (InvITs) for raising funds. In order to enhance connectivity in border areas, the Finance Minister announced that the Government will take up construction of tunnel under Sela Pass. He also announced that for promoting tourism and emergency medical care, the Government will make the necessary frame work for encouraging investment in sea plane activities.

Rajeev Singh, Automotive Sector Leader in Deloitte, “Increased allocation for infrastructure projects such as National highways (target completion in FY17-18 is -9000 KMs) and Bharat Mala project (target completion of 35,000 KM in Phase 1 at cost of Rs 5.35 lakh crore)for seamless connectivity in the union budget should give much needed push to the sector especially M&HCVs (Medium and Heavy Commercial vehicles). Other transformational initiatives include focus on building 3.71 lakh rural roads.”

Overall, the Government has enhanced allocation for the Infrastructure Sector. The budgetary and extra budgetary expenditure for the Sector has been increased from Rs.4.94 lakh crore in 2017-18 to Rs.5.97 lakh crore in 2018-19. An all time high allocation of Rs 1,34,572 crore has been made for the transport sector while the efforts to develop disaster resilient infrastructure is being given a push with an allocation of Rs. 60 crore in 2018-19. This was announced by Finance Minister Jaitley.

Civil Aviation A Thrust Area
In the Civil Aviation Sector, the Budget 2018-19 announced a new initiative NABH Nirman to expand airport capacity by more than five times to handle a billion trips in a year. The expansion will be funded by leveraging the balance sheet of Airports Authority of India. Domestic air passenger traffic has grown at 18% per annum and the regional connectivity Scheme UDAN, will connect 56 unserved airports and 31 unserved helipads across the country. Opertions have already started at 16 airports.

On air travel, the minister said in the last three years, domestic air passenger traffic had grown at 18% per annum and airline companies had placed orders for more than 900 aircraft. He said regional connectivity scheme of UDAN (Ude Desh ka Aam Nagrik), which would ensure that even those wearing “chappals” will be able to fly, has also been initiated to connect 56 unserved airports and 31 unserved helipads, and operations had already started at 16 airports.

Commenting on this aspect of the budget, Sharat Dhall, COO(B2C), said: “We are happy that the budget has laid great emphasis on infrastructure development to boost tourism. The continued focus on UDAN, railway infrastructure, building tourist corridors, enhancing connectivity by starting operations in 56 unserved airports reflects the government’s commitment to the tourism sector. Airport capacity enhancement will boost tourist flows and strengthen connectivity to a large extent. The creation of 10 prominent tourist sites will lead to an escalation in tourism and is very welcome. We were hopeful that the government would bring ATF under GST so as to reduce airline costs and keep fares low to ensure continued growth in Indian air travel market.”

Urban Infra Under Focus
In the Urban Infrastructure Sector, the Government proposes to develop ten prominent tourist sites as Iconic Tourism destinations through holistic infrastructure and skill development. In addition, tourist amenities will be upgraded at 100 Adarsh monuments of the Archaeological Survey of India (ASI). The Finance Minister, Shri Arun Jaitley lauded the work being done under the government’s inter linked programs – Smart Cities Mission and the AMRUT.  He informed that 99 cities have been selected with an outlay of Rs. 2.04 lakh crore under the Smart Cities Mission. Projects worth Rs. 2350 crore have been completed and works of Rs. 20,852 crore are under progress. The National Heritage City Development and Augmentation Yojana (HRIDAY) has been taken-up to revitalize heritage cities.

Under AMRUT program, State level plans of Rs. 77,640 crore for 500 cities have been approved. Water supply contracts for 494 projects worth Rs. 19,428 crore and sewerage work contract for 272 projects costing Rs. 12, 429 crore has been awarded. 482 cities have started Credit rating and 144 cities have got investment grade rating.

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