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  • Union Budget 2018-19 Highlights- Does the Infrastructure Budget Meet Expectations?

    The Union Budget of 2018-19 presented by Finance Minister Arun Jaitley is the 5th final budget of the BJP government before the Lok Sabha elections 2019. Naturally, the anticipation among the citizens as well as the economists were on the rise. While the budget was specifically expected to focus on the revenue downfall and the fiscal slippage in the economy, the infrastructure market was also expecting a boost in terms of capital spending, uniform approach towards all infrastructure sectors and budget allocations for specific large infrastructure projects. Meeting the expectations of the infrastructure section the government has proposed several schemes and allocated plenty of funds for the improvement of the nation in terms of infrastructure.

    Let’s see what the expectations were and how far the budget announcements have met the expectations of the nation:

    Updates of Budget 2018-19 on Infrastructure

    Proposed Schemes and Reforms

    • Railways, roadways, airways along rail and road linkages and Defence and Connectivity infrastructure received major emphasis.
    • Highest budget allocations for the rail, road and rural infrastructure including rural roads and rural housing.
    • A new scheme for revitalising school architecture by the year 2022, ‘Revitalising of Infrastructure and Systems in Education’ scheme launched.
    • Dedicated funding for affordable housing to make schemes like ‘Pradhan Mantri Awas Yojana’ more accessible.
    • 1 crore houses to be built under PMAY out of which 50 lakh houses will be built in the urban areas.
    • To attain the motto of ‘House for all’ by the end of the year 2022. 50 lakh more houses will be constructed in the urban areas.
    • Target to build 100 smart cities under the ambitious ‘Smart City’ project among which 99 cities have been selected. Emphasis will be on offering solar facilities, smart road and smart infrastructure.
    • Increased investment and other help announced for boosting the Education and Health infrastructure in the country.
    • Upgradation and renovation work to be conducted for the improvement of 600 railway stations in India.
    • New tunnel in Sera Pass will be built in order to promote tourism in India, especially in the north-eastern part of the country.
    • Plan to build 2 new planning & architecture schools for IITs and 1 Rail University in Vadodara for boosting railway operation.
    • Construction of 1 government medical college for every 3 parliamentary constituencies along with the improvement of 24 district-level colleges.
    • Under road infrastructure, plans for completion of 9,000 km of National Highway and 3.7 lakh km rural road construction plan.
    • Target of constructing 2 crore more toilets under ‘Swachh Bharat Mission’ in this financial year.
    • Top 10 tourist sites in the country will be converted into exceptional tourist destinations through marketing, branding and private funding.
    • ‘Pay-as-you-use’ system will be introduced by the government for making toll payments.

    Budgetary Allocations

    • Rs.50 lakh crore investment plan for the improvement and proper completion of the ongoing and upcoming infrastructure projects.
    • Allocation of Rs.1 lakh crore for next 4 years for new-launched ‘Revitalising of Infrastructure and Systems in Education’ project.
    • Rs.14.34 lakh crore sanctioned for Rural infrastructure development in India for increased livelihood opportunities.
    • Funding of Rs.200 crore for the Agricultural infrastructure section for livelihood improvement of farmers.
    • Budgetary allocation of Rs.9.469 crore for successful implementation of the ‘Pragati Scheme’.
    • Rs.2.04 crore sanctioned for 99 selected cities in India under the ongoing ambitious ‘Smart city’ project.
    • Rs.99,428 crore allocated for the water supply contracts under the ‘Amrut’ (Atal Mission Rural and Urban Transformation) projects.
    • Additional Rs.14.3 lakh crore sanctioned for Rural infrastructure upgradation and creation of livelihood in such areas.
    • An outlay of Rs.5.35 crore suggested for construction of 35,000 km under Phase-1 of the Bharatmala project.
    • Proposed outlay of Rs.2.04 lakh crore for building 100 smart cities.

    Prime Expected Infrastructure Agenda of Union Budget FY19- Budgetary Allocation

    As speculated by the analysts, the main agenda of the Union Budget FY19 as far as the infrastructure is concerned, was fund allocation for the ongoing as well as proposed projects. In other words, this is the most vital area that was on the agenda list of the last budget presented by the Narendra Modi government.

    Between the fiscal year 2018 to 2022, India was needing around Rs.50 lakh to develop sustainable infrastructure, which equals to approximately Rs.3,000 crore per day investment. Hence, the NIIF (National Investment and Infrastructure Fund) was believed to receive a huge amount of fund in the budget scheduled to be declared on 1st February 2018 by Jaitley.

    Other Expected Key Areas of Focus in the Union Budget of Fiscal 2018-19

    Besides the prime agendas, the Narendra Modi government was expected to focus on several other areas of infrastructure in the budget of FY19. The key areas and the reforms that the infrastructure segment was expecting are enlisted here:

    • While there are already a large number of ongoing and upcoming projects like bullet train, Sagarmala, Bharatmala, smart city and ‘Housing for All’, the new budget was likely to come up with increased fund allocation of up to 50% in infrastructure sector including railways, roadways, waterways, housing, sanitation and rural and urban development. Since the estimated budget for the new highway development programme is around Rs.3,43,045 crore over FY2019-FY202, the budget was predicted to start with fund allocations to the Road Ministry.
    • The Union Budget this year was highly expected to lay increased focus on affordable housing. Despite the launch of the PMAY subsidy or Pradhan Mantri Awas Yojana scheme, those buyers who were relocated to metro and other big cities leaving their ancestral homes, were not able to benefit from it. Hence, for effective implementation of the scheme, the government was supposed to expand the reach of the PMAY scheme.
    • The infrastructure sector is having certain cases under resolution process concerning IBC (Insolvency and Bankruptcy Code). Therefore, the government was predicted to initiate some changes in order to make the bankruptcy resolution process under IBC simpler and tax-friendly. Moreover, the infrastructure sector was hoping to get exemptions from the FY2018 budget valuations allowing transferring of assets at a value lower than the value that is prescribed. Such steps if opted for during the Union Budget will make the process easier and convenient.
    • In the budget, the government was also expected to consider reintroducing the deduction for infrastructure bonds under section 80CCF for specific finance and infrastructure companies which was withdrawn sometime back.

    So, these were the expectations against the major reforms and budgetary allocations that the infrastructure segment received in the Union Budget 2018. While the budget has met the expectations of the country to a great extent, the suggested proposals are now expected to be implemented properly on time to develop the infrastructure sector in India.

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