The union budget comes at a time when Indian economy is going through a slowdown and Finance Minister Nirmala Sitharaman has announced new projects for the infrastructure sector.

The much-anticipated and eagerly awaited union budget was announced on February 1, 2020. India by all accounts is going through a slowdown in recent times and budget delivered by Finance Minister Nirmala Sitharaman tried to come up with the plan to tackle challenges in various sectors. The budget speech lasted approximately for a record 2 hours and 40 minutes (and it was still incomplete) and FM talked about infrastructure, agriculture, construction, aviation, railway, welfare schemes, health sector and gave an outline for projects and plans for the next 12 months.

The budget proposes to provide Rs 1.7 lakh crore for transport infrastructure in 2021. The union minister also said during her speech of allocating Rs 27,300 crore for industry and commerce. To boost infrastructure, Nirmala Sitharaman said 9,000 km of economic corridor will be set up. Accelerated development of highways will be undertaken and Delhi–Mumbai expressway and two other projects to be completed by 2023. Monetisation of 12 lots of highway bundles of over 6,000 km before 2024.

The reaction from the industry of the union budget generally evoked a positive response and hoped that the new policies will relaunch India’s growth story. Ranganath NK, Area Managing Director, Indo Region, Grundfos said, “We welcome this year’s budget which sharply focuses on issues that propels the growth of aspirational India. Addressing the challenges of severe water stress in the nation as one of its top most agenda, this budget gets to the bottom of things by proposing comprehensive measures for 100 water-stressed areas. Given that the budget also aims to empower famers by increasing their dependence on off-grid solutions with solarised grid-connected pumps through the PM Kusum Scheme, I think that this will act as a catalyst to sustainable irrigation solutions across the country. This abundant allocation in agriculture is likely to positively rural development.”

He also added, “We are greatly excited to see the budget allocation for Jal Jeevan Mission. Also the foreseen investment in the renewable energy sector will enable the government to achieve its national action plan on climate change.”

Anshul Singhal, Managing Director, Welspun One also welcomed the union budget and lauded the union govt’s plans to boost the transport infrastructure. He said, “The simplified personal tax regime and effective reduction in tax rates for the sizeable middle class will create a definite upswing in consumption. It’s also heartening to see the government’s continued impetus to the country’s transport infrastructure with the 1.2 trillion rupee proposal to enhance our trunk infrastructure. Both these will have a very positive impact on warehousing demand and supply. The national logistics policy, which the FM touched upon, will minimise the development hurdles and help the overall sector and economy.”

Prakasan, COO, Sterling & Wilson, MEP Business gave his insights on the budget and was hopeful of revival of the Indian economy. “The big infrastructure push in the union budget 2020 is a big step towards boosting the economy and the sector. Government announced a huge spend over 102 trillion rupees ($1.44 trillion) on roads, ports, airports, irrigation and other infrastructure over the next five years. This is definitely a demand revival step and will create an environment for sustainable growth in the sector. This budget is a big growth driver and proposes to step up the construction and MEP industry sectors in the country. I am definitely positive that this budget is going to work for the MEP sector,” said Prakasan.

Though, there were some contradicting views from the industry as well regarding the budget. Kshitish Nadgauda, Senior Vice President | Managing Director – Asia, Louis Berger gave his opinion on the challenges regarding execution of projects. He said, “Continued planned investment in transportation infrastructure including roads and highways, aviation, urban metro rail and high speed intercity rail is a welcome step. The nation’s economic development and growth is heavily dependent on robust infrastructure, and it is thus commendable to see the sustained impetus through announcements made today by the Finance Minister Nirmala Sitharaman.

However, special attention needs to be paid to both design and construction to boost safety and quality, building world-class transportation facilities. This would also bring the overall life-cycle costs down for these projects. Along the 9,000 km economic corridors, new townships/nodes should be developed to create economic growth centers that would stem the flow into existing major cities.

Of the total 1.7 lakh crore allocation for the transport infrastructure, there needs to be a significant outlay for urban transportation infrastructure covering public transportation facilities (metro rail, light rail, trams, urban roadway interchanges, bus transport). Adequate focus should also be on improving the quality of life of daily commuters in urban centers by providing safe and efficient feeder networks and enhanced pedestrian facilities including wide sidewalks, landscaping and public conveniences. Overall, the budget is a step towards a strong, healthy and prosperous India having a positive long-term impact on the economy.”

Wilfried Theissen, Managing Director, Putzmeister India gave a balanced view on the budget and said, “After a record year in 2018, the industry and indeed the economy witnessed a downturn in 2019. One of the biggest issues being faced by the construction industry was the availability of finance and liquidity. We expected the budget to address these challenges.

100 per cent tax expemptions for soverign wealth funds investing in infrastructure projects and enhanced FPI limits should result in increased foreign capital infusion over the medium to long term. Increased foreign investment will also bring with it increased pressure to deliver projects professionally and on time. This should boost the shift to mechanised construction methods, it bodes well for the RMC segment and OEMs.”

He further added, “The extension announced on the partial credit guarantee scheme to cover floated to help HFCs and NBFCs tide over their liquidity crisis shows that the Government does indeed recognise the ongoing stresses in this segment. Whether this helps the industry in the short term remains to be seen. What the budget has not done is help alleviate any of the industry’s challenges in the immediate to short term. The Government has put the ball squarely in the industry’s court to find solutions that will keep business rolling. The Government’s continued emphasis and focus on improving infrastructure in the country is evident from the various plans announced. And we at Putzmeister are fully prepared to help India meet these objectives.”

We welcome this year’s budget which sharply focuses on issues that propels the growth of aspirational India.
Ranganath NK, Area Managing Director, Indo Region, Grundfos

The government’s continued emphasis and focus on improving infrastructure in the country is evident from the various plans announced.
Wilfried Theissen, Managing Director, Putzmeister India