The budget proposes a large capital investment plan of INR 7.5 lac crores which is likely to boost infrastructure growth and create demand for many underlying sectors...

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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The budget proposes a large capital investment plan of INR 7.5 lac crores which is likely to boost infrastructure growth and create demand for many underlying sectors...

Budget 2022 is a future and growth-oriented budget which addresses many sectors and multiple reforms across each of these sectors.  The Government has kept with its agenda of maximum governance and minimum government and has proposed many digital interventions, including in some areas like digital currency, digital university, usage of drones etc.   An analysis of some of the infrastructure sector and related sector impacts is set out below.

The budget proposes a large capital investment plan of INR 7.5 lac crores which is likely to boost infrastructure growth and create demand for many underlying sectors like construction materials, construction equipment and engineering and construction related services.  Additionally, conscious policy making and defined growth targets in areas like road and urban transportation and multimodal logistics (including the Gati shakti program) are likely to positively impact these sectors along with other ancillary sectors.

The budget has also accorded infrastructure status for new age sectors like data centers and grid scale battery storage which will make it easier for such sectors to raise debt financing.  Given the large demand for solar equipment, it is proposed to have a PLI scheme of INR 19,500 cr to promote solar manufacturing in India which should help the country move towards becoming ‘Aatmanirbhar’ in this area, which has historically been dominated by imports.

The government has also made some bold moves in future driven segments like battery swapping by proposing to have interoperability standards and manage the lack of space for charging infrastructure, use of drones for land record digitization, agriculture monitoring and herbicide/pesticide spraying.  There are also initial steps being made in sectors like coal gasification and river linking projects, which could boost productivity and infrastructure spending as they move from concept to execution.

Lastly, this budget is also focused on being able to mobilize resources for some of these spends and has contemplated raising sovereign green bonds to fund some green projects, with a lower and more achievable divestment target.  The budget has also not made many modifications to tax rates and has extended the time frame for concessional tax rates for setting up new manufacturing/power generation units to encourage capital creation

In summary, a very forward-looking budget which proposes to propel India into the future with world class and state of the art infrastructure, technology and evolving digital governance.

[author title=”” image=”http://”]About the Author

Bhavik Damodar is Office Managing Partner and Partner, Deal Advisory, KPMG India Services LLP[/author]

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

 

 

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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