R SHANKAR RAMAN,Chief Financial Officer & Member of the Board, Larsen & Toubro Ltd

Reviving the investment cycle and emphasis on “Make in India” were the clear priorities for Finance Minister Arun Jaitley. Straddling the challenges of stressed infrastructure assets and rising NPAs for the sector and the Centre’s budgetary constraints, he has wisely chosen to seek moratorium on the fiscal deficit time table to find resources for infrastructure investment in the near term.

Increased budgetary outlay to infrastructure and setting up the National Infrastructure Fund are positive measures. While Jaitley has acknowledged the need to revitalise the PPP route of infrastructure development, there is no clarity on specific plans. Plug-and-play concept in the infrastructure sector is a bold ambition and the country will gain significantly if the government achieves this objective.

Integration of all clearances and approvals prior to award of the project, while highly desirable, will be a significant challenge even for the Centre to adhere to project implementation timelines. Speedy resolutions of issues surrounding stalled projects should precede fresh award of new projects. In that context, capacity enhancements in thermal and renewable power will hold interest only if the current travails of the power sector are efficiently resolved.

For meeting the vast investment requirements of the country, access to both domestic and foreign savings is important. Domestic savings have suffered in the last few years due to high inflation. There are measures announced in the Budget to channelise domestic savings into infrastructure formation by launching tax-free bonds. Liquidity and market making in these bonds are important for their success. Removal of distinction between foreign portfolio and FDI will help channelise flow of foreign capital.

While the Budget seems to have identified the thrust areas well, the implementation roadmap and resource planning appear tentative. Plugged in alright, but the game needs good playing.