By Abhaya K Agarwal
Indian Union Budget 2021-22: The Union Budget 2021 is unprecedented in quite a few approaches, as it comes at a time when the nation is attempting to re-construct post the Covid-19 outbreak, which has impacted interests domestically as effectively as internationally. Continuing with efforts on the AtmaNirbhar Bharat agenda by means of six pillars, it has focussed on an raise in public spending to make India a $5-trillion economy. There has been a specific concentrate on enhancing healthcare and infrastructure across India, with a proposed capital expenditure of more than Rs 7 trn cumulatively, a substantial raise more than preceding budgets.
The Budget has produced drastically greater allocation for greenfield and brownfield projects in the railway sector, which incorporate electrification of broad-gauge railway lines, constructing of new freight corridors, and deployment of anti-collision program and specific rolling stock on higher-density tourist routes. This is welcome provided that investments in the railway sector are noticed to have a higher multiplier impact on other sectors. In a huge relief to airlines, Finance Minister Nirmala Sitharaman announced a tax exemption on aircraft leasing which will drastically strengthen the economic well being and general outlook for the aviation sector.
The road and highway sector has been allocated the highest ever capital outlay, for new projects in the states of Assam, West Bengal, Tamil Nadu, and Kerala, which would strengthen connectivity to the mainland cities. The raise in funding for public transit systems, with an objective to raise their modal share, specifically focussing on Metro systems and improvement in bus transport in tier-2 cities, has the possible to give impetus to employment generation. Increased access to travel facilities and much better connectivity in cities by means of Metro projects will not only empower citizens by enhancing access to education, healthcare, employment and financial possibilities, but is also important to balanced and sustainable urban improvement with accelerated financial development.
The FM has supplied a timely increase to the ailing true estate sector by announcing an initiative to monetise surplus land holdings. The monetisation of railway land close to the New Delhi Railway Station is one such initiative which will pave the way for future land improvement projects.
For the proposed capital outlay, sufficient measures to fund new projects have been highlighted. The creation of a professionally managed Development Financial Institution (DFI) with an aim to market private sector participation will act as a catalyst for infrastructure financing. The sectors in which higher private sector involvement is proposed are airports, ports, railways, energy and warehousing assets.
In the previous, different government instrumentalities have located financing big extremely capital-intensive projects extremely hard, resulting in delays and schedule disruption. This Budget has highlighted the need to have to build a National Infrastructure Pipeline (NIP) for monetisation of brownfield assets to build new infrastructure. The move to set up InvITs to attract investment from worldwide funds in the highway and energy sector is a step in the proper path. InvITs in the highway sector have been a accomplishment and really should be explored in other sectors as effectively.
Overall, by means of the Budget, the FM has place forward the quick-term road map to accelerate recovery from the COVID-19 pandemic, by means of drastically greater capital expenditure as compared to previous budgetary allocations for different infrastructure sectors. This will have a multiplier impact on other sectors and build direct and indirect employment possibilities, enabling the government to revitalise the economy and assure balanced regional improvement.
The writer is Partner-Strategy and Transaction, Infrastructure & Government and Public Sector, EY India—with inputs from Arun Tuli, Manager