Budget for Infrastructure sector: Here’s what industry captains make of FM’s infrastructure push

The Finance Minister counted physical infrastructure as one of the six pillars of her Budget.

Union Budget 2021-22: Finance Minister Nirmala Sitharaman today delivered a growth-oriented budget for the coming fiscal year. The Finance Minister has tried to revitalise the infrastructure space in India that, experts say, will have a multiplier effect on the Indian economy and help it stay on the path of growth for the coming year. Sitharaman, reading out the first all-digital Union Budget in India’s history counted physical infrastructure as one of the six pillars of her Budget. Here’s how the industry reacted to the Union Budget.

Hemant Daga, CEO, Edelweiss Asset Management –

“The creation of an infrastructure-focused Development Finance Institution with a capital base of Rs 20,000 Cr (~ $3 bn) is a very good initiative from an economic standpoint. By providing finance for infrastructure projects, which are envisaged under the National Infrastructure Pipeline, this will provide the stepping stone for funding infra projects in India. Coupled with this the zero-coupon bond issuance by IDFs to fund infra projects is another enabler for capital to flow freely.”

Ram Raheja, Director, S Raheja Realty –

“Within the constraints of a slowing economy and keeping the fiscal deficit under check, the Finance Minister has delivered a balanced budget. The budget also brought cheer to the NRIs – the bold move to permit one-person companies or OPCs in India sends the right signals to the real estate sector as it will open up avenues for foreign investment as well. When it comes to the choice of global buyers (NRIs and HNIS), they prefer properties from leading brands because of the overall value proposition it offers. Hence this can further fuel investment and help the organized real estate sector to prosper. The positive sentiment the budget has generated has shown its impact on markets and is likely to help continue the upswing in property buying too.”

CH S. S. Mallikarjuna Rao, MD & CEO, Punjab National Bank –

“Various measures have been announced on the infrastructure front, which are expected to take the economy into a new trajectory of growth. In addition to over a 34% increase in capital expenditure, new highway projects have also been announced. Setting up of a professionally managed Development Financial Institution will catalyze infrastructure funding.”

Arindam Guha, Partner, Leader – Government and Public Services, Deloitte India –

“While a 10% increase in budgetary outlay on infrastructure was always expected, the Government has committed Rs. 5.54 Lakhs towards infrastructure in 2021-22 as against Rs. 4.39 Lakhs in 2020-21 (RE), which translates to an increase of 26%. This clearly shows the continued commitment and focus on infrastructure as a key enabler for GDP growth going forward.”

Krish Raveshia, CEO at Azlo Realty –

“Relief on TDS for dividend on REITs and InvITs will boost investment in these instruments. A development finance institution for the infrastructure sector will facilitate funding, the good part is that it will be professionally managed to ensure seamless execution of operations.”

L Viswanathan, Partner, Cyril Amarchand Mangaldas –

“The budget is focused on growth and comes with several initiatives in the infrastructure sector that can have a multiplier effect.  It caters to the need for a special financial institution for funding infrastructure projects which require “long term patient capital”.  The proposal for enabling debt financing of InVITs and REITs by FPIs is welcome, this will accelerate the movement of assets from Government and Developers to InVITs.  This will help in developing sustainable infrastructure that can be serviced over long term and also enhance the governance of these important.”

Deepto Roy, Partner, Shardul Amarchand Mangaldas & Co –

“A DFI was the need of the hour for the infrastructure sector. The sector needs a long term source of funds and the banks have a significant liquidity issue. Therefore the introduction is a welcome one. However this is a concern around the source of fund. Unless the DFI has access to cheap international source of funds it may meet the fate of previous attempts at securing institutional long term funds in the  past.”