The government announced investment of ₹100 lakh crore in infrastructure in next five years, while railways would need investment of ₹50 lakh crore by 2030.

In a follow-up with Economic Survey 2018-19, chalking out blueprint for $5 trillion economy in next five years, the Union Budget 2019 has extended the emphasis on rapid social infrastructure development in order to propel economic growth. Finance Minister, Nirmala Sitharaman, in her maiden Budget speech duly emphasized the importance of infrastructure and connectivity to the Indian economy.

She announced an investment of ₹100 lakh crore in infrastructure in the next five years. Presenting the first Budget of the Modi 2.0 government, Sitharaman said that the government plans to restructure the national highways programme to create network of highways grid of a desirable capacity for better connectivity. Additionally, the government envisions using rivers for cargo transportation, a move that will decongest roads and railways. The railway infrastructure would need an investment of ₹50 lakh crore between 2018 and 2030.

Projects such as industrial corridors, Bharatmala, Sagarmala and UDAN schemes have and will continue to improve connectivity and increase competitiveness, paving the way for New India. Road corridor project Bharatmala, port-linked industrialization plan, Sagarmala and UDAN will help in bridging the rural-urban divide and improve transport infrastructure. The finance minister also said that the government expects cargo movement in Ganga to increase four times in next four years with the creation of transit hubs at Varanasi, Sahibganj and Haldia.

Although, the Budget ticked many of the right boxes to improve liquidity flow, reactions from economy experts and market analysts were mixed, however, for players in construction and infrastructure industry, the Budget 2019-20 is—progressive and inclusive. “Budget is a mega investment-oriented initiative with a strong focus on scaling up rural infrastructure and demand along with slew of tax simplification measures, aimed at boosting growth, maintaining high level of fiscal discipline,” noted ASSOCHAM President B K Goenka.

Moreover, the increase in Budget outlay for defence, infrastructure development including roads, railways, power and affordable housing is expected to elevate the demand for construction equipment as well as machines. “Machine tool industry needs to gear up to the opportunities that are likely to rise in future. Vibrant manufacturing is imperative for India’s growth. The incentives announced in the budget are but a beginning,” said V Anbu, Secretary, Director General & CEO IMTMA.

The Budget has come as a mixed bag for the real estate sector at a time when the industry is showing signs of revival. Sanjay Dutt, MD & CEO, Tata Realty & Infrastructure Ltd, said that the availability of land belonging to CPSEs and central ministries to public infrastructure and affordable housing is expected to provide the much-needed impetus to the housing demand. “The allowance of FIIs and FPIs to subscribe to REITs and INVITs would lead to an influx of investment in the cash strapped sector. The government’s assurance to provide one-time credit guarantee for the first loss up to 10 per cent for purchase of high rates pooled assets of financially sound NBFCs will further help the cause,” said Dutt.
Vipin Sondhi, MD and CEO, JCB India Ltd noted that this Budget is about India’s long term vision. It addresses the many factors required for India to become a $ 5 trillion economy in the next few years. It aims at building India’s capability across sectors. Vital amongst them is the creation of Social Infrastructure which would thus lead to an improvement in the ease of living. Moreover, it addresses the aspect of electric mobility as well and intends to create an ecosystem for it to scale up. The budget touched upon the importance of growth for MSMEs to improve exports through innovation. “With infrastructure growth being vital to achieve all of the above, a revival of the PPP, structural reforms in asset monetisation and a notable provision for infrastructure with improved liquidity over the next few years is welcome,” said Sondhi.

There is also a visible push for new age technologies and digital solutions as the Budget specifically mentioned the importance given to artificial intelligence, internet of things, big data and digital India – which is an integral part of the long term vision. With an eye to boost up the economic growth and Make in India, the proposal to launch a scheme to invite global companies to set up mega-manufacturing plants is laudable. “All in all, it is encouraging to see the government’s continued focus on the programs- UJALA, Saubhagya and UDAY Yojana as key initiatives to the nation’s economic growth, with an even greater focus on digitisation to boost the rural economy,” said Anil Chaudhry, Zone President & MD, Schneider Electric-India. In the end, Budget 19-20 will count as an opportunity for all, willing to ride the $ 5 trillion economy-class bus heading for New India.

Schemes such as BharatMala, Sagarmala and UDAN are bridging rural urban divide and improving our transport infrastructure.

Highlights
• The country requires ₹20 lakh crore worth investment per year.
• Government would restructure highways and the movement of cargo through the River Ganga.
• Proposal to improve railway infrastructure through the public-private partnership model as Rs 50 lakh crore of investment would be required over the years for the purpose.
• Mantri Gram Sadak Yojana: Phase 3 envisaged to upgrade 1.25 lakh km of road length at an estimated cost of ₹80,250 crore.
• Bharatmala, with an investment of ₹80,250 crore to build 1,25,000 km of village roads.
• Government targets for raising funds by disinvestment to ₹1,05,000 crore in the Budget of 2019-20, up from ₹90,000 crore in the interim budget in February.