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3211 Impact of Budget on Infrastructure

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2Executive SummaryThe Union Budget, presented on 28 Feb.,2015The budget usually affects companies across sectors.Fastest growing economy.Rs. 70,000 crores to Infrastructure sectorTax-free bonds for projects in rail, road and irrigationNational Investment and Infrastructure Fund (NIIF)PPP model for infrastructure development5 ultra mega power projects, each of 4000MW.3NiftyAs on 28 Feb.,20154.00 pm4Tata Comm.

Bharti Airtel

LT

Power Grid

Reliance Infra

IRB

5CESC

JP Power

Adani Ports

BHEL

Siemens

JP Associate

CESC Calcutta electric supply commision6Sub-Sector7RoadsConnects Rural centre with urban centre across the countrySpending on roads will go up by INR 14000 crores. Government AimsTo complete 100,000 km of under construction roads Providing sanction for another 100,000 km ImpactThis gives a significant push to companies that build roads, bridges or manage tolls to recover the cost of making it.Constructions of roads will connect the unconnected habitations by all-weather roads thus help in development of undeveloped area.8PowerNo country can grow at a significant rate without adequate power.To enhance the generation of power.Government AimPower Electrification by 2020 5 New Ultra Mega Power Projects (4,000 MWs each) under plug and play model.ImpactUnlock investments to the extent of 1 lakh crore.Plug & Play model will help rule out delays on account of clearancesConcerned companies / entities benefited.Companies can start project immediately

9Infrastructure FinanceThe budget usually provides for financing the infrastructure sector through institutions.Government AimWill establish National Infra Fund, to allocate Rs 20,000 croreTax free infrastructure bondsImpact This will help, completing projects in the rail, road and irrigation sector This will enable the Trust to raise debt, and in turn, invest as equity, in infrastructure finance companies such as the IRFC and NHB.10Real EstateThis is also an important part of the budget every year.Government AimHousing for all - To build 60 million houses in urban and rural areasNew bill to curb benami transactions in real estate ImpactAffordable House for everyone.Increase in demand for Cement which is linked with the growth in infrastructure sector.Black Money transaction will decrease11RailwaysRailways are the lifeline of Indian goods as well as passenger movement. India has one of the largest railway networks in the world.Government AimSpending on railway will go up by INR 10,000 croreAllocation 1200 cr. towards Delhi-Mumbai Industrial Corridor (DMIC) as ordering picks up throughout the Year.ImpactAdditional allocations for extending the reach of the railways and improving services provide an opportunity to the concerned companies/ entities.

12PortsThere are 12 Major ports in IndiaGovernment AimPorts in public sector will be encouraged, to corporatize, and become companies under the Companies Act.Utilize huge land resources lying unused with them.ImpactThis could facilate airport-type concessions.Boost revenue for major port13Points not mentioned in Budget No mention of smart citiesNo substantial development of AirportNo Tax Holiday for companies 14ConclusionSpending on roads will go up by INR 140 billion, on railways by INR 100 billion. Off-balance-sheet borrowing of INR 200 billion a year is proposed. If all these are summed up, this comes to less than 0.4% of GDP. This is not going to make a difference to the demand side of the economy, even if we think that all this spending hits the economy in 2015-16 itself. However, a group of initiatives could constitute genuine progress on infrastructure. Legislation on replacing multiple prior permissions by a pre-existing regulatory mechanism; new laws on procurement, disputes and infrastructure regulation. 15Overall Impact on Infrastructure SectorNeutral16