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FM Announces 3-strategies For Development Of Infrastructure

These steps will have a far-reaching positive impact on growth over the midterm, although some immediate expenditure on construction is also called far.

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To Usher, in the Dawn of a new era with a holistic approach in mind, the FM has announced 3 pronged strategies for development of infrastructure. Proposal for the setting of a separate DFI (development financial situation) exclusively for funding infra projects a massive program for monetization of completed/ running projects which will help in creating required resources through the instruments like INVITs, which functions in a manner similar to the mutual funds. In addition over a 34% increase in direct expenditure to infra with new highway projects in select states is a welcome step to take the economy to a new trajectory of growth.

These steps will have a far-reaching positive impact on growth over the midterm, although some immediate expenditure on construction is also called far.

Setting up of a Separate Asset Reconstruction company for dealing with the gigantic problem of NPAs, is a step in the right direction, which will help in better recovery and prompt the banks to boost credit, which is the need of the hour.

Recapitalisation of PSBs with Rs 20000 crore is also a welcome step as this will strengthen the banks to inturn raise credit creation capacity.

It is a bold and historic budget which will facilitate the quick revival of the economy, to take it to a higher growth trajectory.

The procurement of resources through steps like monetisation of assets and disinvestment and in turn spending them on capital expenditure, in the critical areas like health and infrastructure is a very defining and welcome move. To Supplement the funding of infrastructure through national infrastructure pipeline (NIP), setting up of a separate DFI is a step in the right direction. The encouragement of instruments like INVITs and REITs for raising resources and simplifying conditionalities for foreign funds shall also bridge the gap of resources.

Setting up a separate Asset Reconstruction company, for handling the gigantic problem of non-performing assets is going to be a game-changer in the financial sector. This will not only facilitate the recovery process but also help the banks in focusing on fresh credit growth, which is the need of the hour.  The recapitalisation of banks and proposed privatisation of some PSBs  will further improve the efficiencies in the banking sector.

The budget also proposes steps towards ease of doing business, more support to the MSME  sector, and simpler compliance culture, which are welcome steps. Besides, no major tax burden on the public has been imposed which will help in boosting retail spending and Govt is going to rely more on long term borrowings.

The crucial part shall however be timely and effective implementation of the schemes for delivering the desired results.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Tags assigned to this article:
Union Budget 2021-22 Union budget 2021

Jyoti Prakash Gadia

The author is Managing Director at Resurgent India

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