Infrastructure companies see several positives in the Budget in the areas of power, roads, ports, and in the setting up of smart cities and industrial corridors.
E Sudhir Reddy, Chairman and Managing Director of IVRCL, said it is heartening to note that the Government has restrained its attention on infrastructure. This will create an environment to boost investments in the sector which has been passing through a tough business cycle.
The Finance Minister’s move to permit banks to lend for longer term will make public-private partnership projects financially viable — it will allow the deepening of debt as it spreads out to a longer tenure.
Isaac A George, Chief financial Officer of the GVK Group, said the move to provide coal linkages for power plants waiting for fuel will be beneficial to several companies including GVK’s Goindwal Sahib project.
The provision relating to tax concessions for projects to be commissioned by March 2017 is also very encouraging. The FM’s move to issue infrastructure bonds will help in the reduction in flexibility to developers. The special concessions extended to the renewable energy sector will benefit solar and wind energy companies against dumping-related issues, George explained.
The move to develop 8000 km of roads and airports in Tier II cities is positive. However, we will have to look at the fine print as to who will be encouraged to develop the latter. There is lack of clarity on the retrospective nature of the tax and also on the GST implementation.
Single-biggest beneficiary According to Indian Ratings, construction and infrastructure is the single-biggest beneficiary.
The provision for long-term loans would reduce the need to refinance for the projects in the sector.
Vipin Sondhi, MD, JCB Iindia, said “The Budget’s focus on infrastructure sector encouraging banks to lend long-term funds to the infrastructure sector, extending the benefit of investment allowance to Small and Medium Enterprises, and the emphasis on manufacturing growth should help revive the capital goods sector.” M Gautham Reddy, Executive Director of Ramky Infra, said the Government has taken up some initiatives but they are not adequate, as they do not really address sector concerns.