Infrastructure outlay in Budget will help boost post-COVID industrial order

In her Budget speech on February 1, Finance Minister Nirmala Sitharaman proposed a 35.4 per cent hike in capital expenditure outlay to Rs 7.5 lakh crore, betting on public capital expenditure with an intent to pump the investment cycle and boost India's Inc's economic recovery. At the Business Today's Budget Roundtable 2022, the industry leaders got together to talk about the post-COVID industrial order and almost unanimously applauded the government's budgetary allocation towards infrastructure.

"If I look at the collective wisdom of the crowds, everybody's applauding the Budget. I also believe that looking at the helicopter view, tourism and hospitality sector is an indirect beneficiary due to several steps that are being taken in the Budget. If there are more train stations, airports, highways, then we tend to be a beneficiary. If there's ease of doing business, more disposable income, more dining out, then we're also beneficiary," Indian Hotels Company Ltd (IHCL) MD and CEO Puneet Chhatwal said.

"Where I think we missed out…giving this industry infrastructure status doesn't cost anything," he added.

Chatwal said that it could have encouraged more capital inflow coming into the sector. After 75 years of independence it can be included in the concurrent list of the constitution. "This sector has shown a lot of character, has paid all its taxes, rents, statutory obligations although they were put in a lockdown. So, little bit more empathy would have been good," he said.

Agreeing with this view, Vinayak Chatterjee, managing trustee at The Infravision Foundation, said, "There's one school of economists which say you can put money directly into the hands of the people. The other extreme of the spectrum is in terms of creating lasting capital assets for the nation. You achieve the same thing by spending this kind of outlay in infrastructure. At one stroke, it creates demand for intermediates, employs an army of workers across India. In the past, we've done a little of this and a little of that."

Chatterjee added that it's important that there has been a significant reset of the playing field between private sector and government in the Budget. "There has been an announcement of a project called surety bonds. Indian businessmen have a major pain point with bank guarantees. Now the insurance sector is stepping in that removes the pain point. She (FM) has announced capacity building measures for all towns and cities. There's a new international arbitration centre in Ahmadabad," he said.

The industry players are also betting on digital being the future. "This year, every few lines I could see the word digital being used. One thing that's consistent about the Budget in the last few years is that digital is no more seen as potential use case. It's here to stay," Ritesh Agarwal, CEO of Oyo Rooms, said.

The outcome of this is that companies like Oyo and other unicorns can create great digital infrastructure to build on top of it, he said. "In the hospitality ecosystem, the last two years have been extremely challenging. But COVID has also led to some opportunities like road trips which is at its peak. Investment in infrastructure creates an impact in all of our businesses. Investment in digital and infrastructure is a long-term bet to growth," he added.

Healthcare is another important area that needs the attention of the government, Naresh Trehan, MD of Medanta, said. "There has been a small increase in overall allocation to the health ministry by Rs 16,000 crore. We have enough burden of disease multiplied by the pandemic. In addition to that, we have the lifestyle diseases. Budget outlay has to increase. There are a few things that did happen in the Budget like mental health portal, skill development portal, etc. These are things that have contributed in some way but not materially," he said.

He added that the needle didn't move enough. "We should be put in the national priority sector. It will encourage private sector to create more in the rural areas. Our health indicators are dismal. Ayushman Bharat scheme was one of the good thing. Not many people have accessed it yet. But the work has started. We're on the right path but allocation has to be much higher," he said.

Historically, he added, there has been very little help coming from the government for the private healthcare providers. but some things can be done to stimulate high-level healthcare in tier-2, 3 cities.

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