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BUDGET POLICIES OF INDIA

2013-14:

A PRESENTATION ON

INFRASTRUCTURAL POLICIES OF

INDIA.

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What is Infrastructure?

The set of interconnected structural

elements that provide framework supportingan entire structure of development.

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You and I come by road or rail, but economists

travel on infrastructure.

--Margaret Thatcher

INFRASTRUCTURE

Transport

Rural Development

Power

Textile

Metals & MiningReal Estate Construction

Information Technology

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What does budget 2013-

2014 means for Indiasinfrastructure?

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CHALLENGES

Subdued performance of construction sector.Policy Paralysis

Delay in environmental clearances.

Land acquisition problems.No single window solutions.

Dues owed by Central Government to the

private sector amounting Rs.65000 Crores.Shortage of new investment due to lack if faith

amongst investors.

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PROJECTED INVESTMENT IN

INFRASTRUCTURE BUDGET ON GROWTH

TARGETS: 12TH

PLAN

Base

Year

2011-12

2012-13 2013-14 2014-15 2015-16 2016-17

GDPmp 63,14,265

68,82,549 75,01,978 81,77,156 89,13,100 97,15,280

GDP growth

rate (%)

9.00 9.00 9.00 9.00 9.00 9.00

Infrastructur

e

investment

as % of

GDPmp

8.37 9.00 9.50 9.90 10.30 10.70

Infrastructur 5,28,316 6,19,429 7,12,688 8,09,538 9,18,049 10,39,535

(Rs. Crore in 2006-

07)

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Transport

ROADIndia has the 3rd largest road network covering 4.2million kms and

account for 65% freight and 80% of passenger traffic. Source

NHAI

Formation of regulatory authority.

A Look East policy proposes to build roads in the North Eastern

States and connect them to Myanmar Industrial Corridors.

Under DMIC plans, 7 new cities have been finalised. Removal of bottlenecks stalling 3,000 km of road projects in

Gujarat, M.P, Maharashtra, Rajasthan and U.P, will be awarded in

the first six months of 2013-14.

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Port & Harbours

Two new major ports at Sagar in West

Bengal and in Andhra Pradesh with

addition of 100 million tonnes of capacity.

New outer harbour will be developed in the VOC

Port at Thoothukkudi (T.N.) through PPP at an

estimated cost of 7,500 crores (addition of

42million tonnes of capacity.)

Allocation of 9000crores for ports and mines

connectivity.

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Waterways

A bill to declare the Lakhipur-Bhanga stretch of

riverbank Barak in Assam as a 6th Nationalwaterway.

Grid connecting waterways, roads and ports.

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RURAL DEVELOPMENT

The corpus for Rural Infrastructure Development Fund

(RIDF) managed by NABARD will be raised to Rs 20000 cr.

Allocation of 80,194 crores in 2013-14 for Ministry of RuralDevelopment marking an increase of 46% over 2012-13.

Carving out of PMGSY-II(Pradhan Mantri Gram Sadak

Yojana) and allocation of a portion of funds to newprogrammes benefitting states such as Andhra Pradesh,

Haryana, Karnataka, Maharashtra, Punjab and Rajasthan.

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Power

Construction of a transmission system from Srinagar to Lehat a cost of 1,840 crore to improve power supply. 226 crores

granted for 2013-14.

Approval for the financial restructuring of DISCOMS to

restore the health of the power sector.

Allocation of tax-free bonds.

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OIL, COAL and Gas

India is the 4th largest oil importer buying

nearly 80% of its need.Duties on steam coal and bituminous coal has been equalized

at 2% from 1% and 6% earlier.

To reduce dependence on imported coal, the Budget islooking to set up a PPP policy led by Coal India.

Reduction in CVD(Countervailing Duty)

Intention to review the Oil and Gas exploration policy tomove from profit sharing to revenue sharing contracts.

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TEXTILES

Acceptance of working capital and term loans at aconcessional interest of 6 percent in the handloom sector.

Additional incentive of 96 crores in F/Y 2013-14 to the

Ministry of Textiles for interest subvention.

Acceptance to leverage assistance from Multilateral

Development Banks to extend SFURTI(Scheme of Fund forRegeneration of Traditional Industries) to 800 clusters

during the 12th 5year Plan.

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Textiles

To continue the Technology Upgradation Fund Scheme(TUFS) for textile sector in the 12th Plan for the targeted

investment of 151,000 crore. For modernisation of power loom

sector 2,400 crores have been provided for F/Y 2013-14.

50 crores to the Ministry of Textiles to provide an additional

grant of upto 10 crores to each Apparel Parks to be setup

within SITPs (Scheme for Integrated Textile Parks).

Provision of 50 crores for F/Y 2013-14 for the Integrated

Processing Development Scheme.

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Metals & Mining

Export duty on galvanized steel sheets is reduced from 7.5%to nil.

Investment allowance of 15% to manufacturing companies

that invest Rs100crores or more in plant and machinery

during the period 1.4.2013 to 31.3.2015.

Import duty on thermal coal increased from NIL to 2% andCVD increased from 1% to 2%.

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Metals and Minings (Contd.)

PPP policy framework with Coal India as one of the partnerswould be formulated.

Excise duty on silver increased from NIL to 4% on silver

manufactured from zinc/lead smelting.

Export duty on bauxite is increased from NIL to 10%.

Increase in surcharge from 5% to 10% for all companies

whose taxable income exceeds Rs100mn. This would imply

higher tax rate by up to 1.5% for most of the metals andmining companies.

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Real Estate and Construction

Introduction of tax-free bonds.

Credit guarantee fund.

Additional income tax benefit to first home buyers which

home loans up to 25L and value of house property upto 40L.

TDS of 1 per cent on the transfer of immovable property.

Excise duty on marbles up from Rs 30 per sq meter to Rs 60

per sq meter.

The additional 5% surcharge will lead to an increase in thetax liabilities of companies.

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Information Technology

Despite constraints substantial enhancements given Science &Technology, Space & Atomic Energy.

Rs. 200 crore to be set apart to fund organisations that will scale

up S&T innovations & make these products available to thepeople.

All cities having a population of more than 1,00,000 will be

covered by private FM radio service.

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Infrastructure Financing

Infrastructure Debt Funds (IDF) to encourageInfrastructure debt funds. 4 IDFs have beenregistered with SEBI and of which 2 werelaunched in February 2013.

Introduction of QFI(Qualified Foreign Investors).Tax-free bonds.

ECB(External Commercial Borrowings)

India Infrastructure Finance

Corporation Ltd (IIFCL), & AsianDevelopment Bank to offer creditenhancement to infrastructure companies.

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Miscellaneous

14,873 crore for JNNURM(Jawahar Lal Nehru NationalUrban Renewal Mission) in 13-14 as against 7,383 crore.

Out of this, a significant portion will be used to support the

purchase of up to 10,000buses, especially by the hill States.

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UNFOCUSED AREAS

Exemption of MAT(Minimum Alternate Tax) thatcontradicted tax savings under Section 80IA.

Reintroduction of Tax Saving Infrastructure Bonds U/S80CCF

Affordable housing may receive Infrastructure statusCurrently, there is a supply shortage in affordable housing

segment. There are numerous issues which impede theprogress of projects falling under the category of affordable

housing. If given "Infrastructure" status, it would becomeeasy for developers to raise money from banks without muchof hassles.

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CONCLUSIONS

Aiming specifically at the infrastructure sector, the budgethas proposed some welcome steps which the industry was

looking for to rekindle the much needed business confidence.

The announcement regarding constitution of a regulatory

authority for the roads sector is welcome and addresses a

long felt need. But the biggest challenge is the

implementation of policies.

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THANK YOU!!!