Green signal for infrastructure bl-premium-article-image

Our Chennai Bureau Updated - November 16, 2017 at 04:20 PM.

After a year that infrastructure players will be glad to put behind them, the plans to support the sector with additional funds comes as a welcome move.

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Mr G. R. K. Reddy, Marg Ltd has welcomed the budget proposals to boost investment in the infrastructure sector. Concrete steps have been taken towards funding access through plans for tax-free infrastructure bonds of Rs 60,000 crores, twice that planned in the previous Budget.

The Budget is set in a scenario of rising inflation, tight liquidity, high interest rates, industrial slowdown, delayed reforms and a negative market sentiment. It presents a mixed bag in general.

Power plant projects benefit from access to ECBs, tax holiday for power plants that commence generation by March 31, 2013; the Cascading effect of Dividend Distribution Tax has been eliminated, and will benefit infra companies that typically operate with an SPV model. The delay in implementation of the Direct Tax Code (DTC) and the continuing want of clarity with respect to SEZs is a big disappointment.

CLEAR PLANS

Mr Ayodhya Rami Reddy, Chairman, Ramky Group, said the Budget this year gives a good road map for the infrastructure sector. The government has come up with initiatives to build road infrastructure to the tune of 8,800 kms, and plans to double the quantum of tax-free bonds for financing infrastructure projects.

Mr Zubin Irani, President, UTC Climate, Controls & Security (India), said the Budget has shown some green signals towards infrastructure growth in India, which has fiscal roadblocks in its way. The planned Rs 50 lakh crore investments in infrastructure is indeed worth appreciating, although separate amendments and provisions for real estate sector would have been welcomed. The proposed investments in health and education sectors will further boost the infrastructure. The two-percentage-point hike in excise and custom duties will have a cumulative effect on the cost of construction and impact the revenues substantially and delay housing purchase plans.

A research report by Angel Broking points out that in 2011, the infrastructure sector saw depleting order books and high interest rates, project delays and a shrinking bottom line for most infrastructure companies. It is welcome that infrastructure development has remained high on the agenda of the Government.

Measures such as reduction in the rate of withholding tax on interest payments on three-year ECBs for funding infrastructure projects, encouraging public private partnerships in road construction projects by allowing ECBs for capital expenditure on the maintenance and operations of toll systems for roads and highways, have been taken up. It has added capital investment in irrigation, fertilisers, telecom towers and oil and gas to the list of eligible items for viability gap funding.

Published on March 17, 2012 16:33