Budget 2012 - 13 : Focuses on Infra Development and Funding

Defying inflationary pressures and euro zone crisis, the Finance Minister in his Budget proposals has attempted to steer the economy out of recessionary slumber. To give infrastructure the much needed boost and to bridge the infra funding deficit he marsheled all resources at his disposal and fired a barrage of tax free bonds to generate funds for infrastructure sector which plays a pivotal role in generating jobs, shaping the fiscal health of economy and accelerating GDP growth. In fact, the approach is straight, loud and crystal clear attempt to make India an attractive destination for global investors by conceptualizing the cascading effect of dividend distribution tax by terminating secondary tax on companies and skillfully employing the ECB window to generate infra funds both from internal and external resources.

Matching funding deficit, the Finance Minister in his Budget proposals has set aside an astounding target worth Rs.50,00,000 crore for infrastructure sector for the 12th Plan period, 50% of which would flow from the private sector. For meeting current fiscal's investment requirement there is a proposal to raise Rs.60,000 crore through tax-free bonds, which is twice the amount of Rs.30,000 crore earmarked for the sector in the outgoing fiscal. In addition a barrage of tax free bonds by the National Highways Authority of India (NHAI), Indian Railway Finance Corporation (IRFC) and India Infrastructure Finance Company Ltd (IIFCL), will generate Rs.10,000 crore each. While National Housing Bank Small Industries Development Bank of India and HUDCO will raise Rs.5,000 crore each. Besides, Rs.10,000 crore would be raised by the power sector. The port sector would raise another Rs.5,000 crore. Further, the first Infrastructure Debt Fund with an initial corpus of Rs.8,000 crore was recently set up for tapping the overseas markets for long tenor pension and insurance funds.

The other groundbreaking steps included reduction in withholding tax on interest payments, encouraging PPP in road construction by permitting ECBs for infra funding and capital expenditure on the operation and maintenance of toll roads highways and expanding the ambit of the list of viability gap funding and pushing the road building targets to 8,800kms are expected to place the economy on the higher growth trajectory.

Injecting a major boost to the road and highways sector, the government in its budgetary proposals has targeted close to Rs.7,00,000 crore investment for the next half decade. This is exactly more than double of the amount earmarked for the sector in the past half decade during which project under NHDP-Phase 1 and II have largely been completed while awarding projects under Phases III, IV and V is progressing at brisk pace. Since about 40% of the total length under the NHDP is yet to be awarded the concessions and fund raising measures will have a positive impact further supporting NHAI in its project implementation drive. In the Budget Finance Minister has proposed to set a target of covering a length of 8,800 km under the NHDP during current fiscal and to achieve the target, funding allocation has been hiked by 14% to Rs.25,360 crore for the current fiscal. NHAI has been authorised to raise Rs.10,000 crore through tax-free bonds enabling authority to award higher number of projects in the coming year, explained National Highways Builders Federation (NHBF), the lobby body of highway developers, adding that additionally, the developers welcomed the move to reduce withholding tax from 20% to 5 percent and the move to allow Qualified Foreign Institutions to invest in corporate debt market. Since about 40% of the total length under the NHDP is yet to be awarded the proposed concessions and fund raising measures will have a positive impact and will further support NHAI to speed up project awarding process. In addition to this, pushing the pace of road building in countryside a sum of Rs.24,000 crore has been allocated under the Pradhan Mantri Gram Sadak Yojana (PMGSY), which again gets an increase of 20% as compared to past fiscal. Attracting private investment, the Budget extended VGF scheme covering multiple sectors including oil, gas, terminal markets and irrigation where private players have been allowed to invest and develop and operate government infrastructure project on the PPP module.

Extending a major booster to the construction sector property builders developing affordable houses have been allowed to avail lower interest costs by using External Commercial Borrowing window and in another move 1% interest subvention scheme for affordable housing has been extended for another year, benefitting home buyers up to a price tag of Rs.15 lakh. In another proposal a sum of Rs.1,180 crore has been set aside for building 4,000 housing units to personnel of Para-military Forces. Similarly, construction players including (Hudco) have been allowed to generate funds to the tune of Rs.5,000 crore using ECB window.


In addition, the finance minister also proposed the setting up of a Credit Guarantee Trust Fund ensuring better flow of institutional credit for housing loans and has created an enhanced provision under Rural Housing Fund from Rs.3,000 crore to Rs.4,000 crore. Under the Indira Awas Yojana, which is primarily meant to provide housing for BPL families, has been allocated Rs.11,075cr under the rural housing scheme in the budget. Each BPL family gets Rs.45,000 as assistance in plains and Rs.48,500 in hilly areas. In addition, the Finance Minister has also raised the allocation for the National Social Assistance Programme by 37% to Rs.8,447 crore. The budgetary measures like relief on personal income tax and tax free interest on savings bank account up to Rs.10,000 per annum and relief to those in the tax bracket of 20 to 30% will increase the disposable income of the salary class further increasing the demand for housing.

In the current Railway Budget the Railway Minister has provided a four-fold increase worth Rs.7.35 lakh crore in investment for the next five years. Budget has rolled out plans to renew and upgrade nearly 19,000 km rail track to run heavier freight and passenger trains at high speed. Out of the total allocations, Rs.63,212 crore will be invested on track modernisation in the next half decade of which Rs.6,467 crore has been made available in 2012-13 financial year. Enhancing the budgetary allocation for rolling stock to Rs.18,000 crore from Rs.13,824 crore in the previous budget is set to give a major booster to the private wagon industry with the reintroduction of wagon-investment scheme as the fund constraint is a severe bottleneck in the progress of the ongoing projects. The revival of the procurement plan for high-power electric and diesel locomotives needed to be fast-tracked to make up for the lost time.


That apart, the sum worth Rs.7.35 lakh crore that has been earmarked for the modernization of the Indian railways in the 12th Plan will also prove a business booster for the construction sector. Since it is a four-fold increase as compared to the previous Plan periods, companies engaged in the construction of tunnels, tracks, bridges and rail terminals will reap rich dividends.

In addition, it will also invest on new facilities to upgrade coaches and introduce new wagons with higher axle and payloads to improve productivity with increased focus on safety. It also plans to manufacture crash-worthy coaches with proven anti-climb features of not toppling during accidents.

Players engaged in the container train operations space including Concor, Gateway Distriparks and Arshiya Rail are heading for rosy days ahead as Railway Minister, has assured them of policy interventions to extend incentives to container movement on trains. But the extent of exact benefit will be clear only after the exact interventions are spelt out. Container train operators contribute about Rs.4,000 crore annually to railways freight revenues.

Likewise, the Budget has also injected a booster worth Rs.2, 216.07 crore for the Delhi Metro Rail Corporation (DMRC) which is a record increase as against to Rs.580 crore in the last fiscal. The sanctioned funds will include Rs.100 crore for the extension of the Faridabad line and Rs.1,112.6 crore sanctioned for the Metro's on-going expansion. It is on record that for Phase III, Rs.1,112.6 crore is the Centre's equity, which would equally be matched by the state government. The ratio of funding for Phase III is 21.27% each from the Centre and the Delhi government withthe rest will be met largely by a loan from the Japan International Cooperation Agency (JICA), along with property development, funds from the Delhi Development Authority (DDA) and other avenues. The total cost for the third phase network is approximately Rs.35,242 crore.

Cheering the power companies the Finance Minister in his Budget proposals, has not just allowed ECB route to be used for retiring rupee debt of power companies but also allowed duty free import of coal for 2 years. A step to bring down custom duty on iron ore equipment from the current 7.5 per cent to 2.5 per cent will help the equipment manufacturers and mining segment alike. In an attempt to meet the acute shortage of coal for the power plants, the government has decided to auction 16 coal blocks to power producers, giving them the chance to bid for 8,165 million tons of reserves, enough to light up a whopping 68,000-mw of power plants for 30 years. The blocks are part of the 54 blocks with 18,000 million tons of reserve, which will soon be offered by the coal ministry to various sectors, including power. The ministry has allocated 25%, each, to steel companies and state mining corporations. However, among others, a little less than 5% has been earmarked for cement and sponge iron units and two small blocks would be offered to developers for pilot surface gasification projects.

Imparting a major push to the shipping sector the Budget 2012-13, has provided another year to figure out how it can raise Rs.5,000 crore through tax-free bonds to meet its financial requirement during the fiscal. Among various options, including setting up of a Maritime Finance Corporation, the ministry has proposed the money be raised by Jawaharlal Nehru Port Trust, Navi Mumbai. The JNPT, which spread over 10 square kilometres, was chosen because it is a profitable port. The raising of funds through this route could come in handy, especially since there has been a reduction of 25% in the Budget allocation towards the shipping sector, with Rs.2,128 crore allotted this year as compared to Rs.2,850 crore in 2011-12. The overall allocation to the shipping and ports sectors increased by 5.7 percent from Rs.5,367 crore, in 2011-12 to Rs.5,675 crore for 2012-13. However, higher allocations have been made to JNPT, Mumbai Port Trust and Dredging Corporation of India, aggregating to Rs.1,595 crore but the shipping ministry could not spend 17.7% of the total allocation of Rs.6,524 crore made in the last budget.


In totality, investment worth Rs.1.2 lakh crore is expected in the port and airport sectors in the 12th Plan period during which port sector will attract over 80% of the funds. Whereas traffic at the airports and ports is seen growing at 11% and 6.7 percent respectively. The allocation of funds in the form of tax free infrastructure bonds and the facility to generate funding resources through external commercial borrowing window will be a booster for sectors. The Budget has also allowed airline companies to use ECBs for one year, subject to a ceiling of $1 billion.

As far as the steel sector is concerned, the new trains, railway stations, rail lines for Kolkata Metro and gauge conversion are all positive indicators for the increase in steel consumption. To cater to the likely increase in the steel consumption SAIL is setting up a new facility in Bhilai to produce heavier rails and to cater to rail-based mass rapid transit systems like metros. Apart from this, the wagon manufacturing facility being set up jointly by SAIL and RITES at Kulti is likely to commence operations towards the end of 2012-13. The new wagon manufacturing facility is being proposed at Sitapalli in Orissa and a rail coach factory at Palakkad, Kerala, besides two new coach factories are also being planned in Karnataka and Gujarat. Triggering greater consumption of steel in the proposed track upgradation scheme of the Indian Railways in the current rail Budget has in fact offered a bonanza for the country's steel manufacturers. The hike in excise duty from 10 to 12%would have a neutral impact on steel industry as it is expected to be passed on to customers and they could see a price rise of Rs.700 to Rs.1,000 per ton. Increase in custom duty on flat steel could provide flat steel players the flexibility to further increase prices by Rs.500 to Rs.1,000 per ton. Industrialists engaged in steel manufacturing in the domestic market have unanimously criticized the Budget proposals as its hope for infrastructure status remained unfulfilled for which the industry has been lobbying, commented Managing Director Tata Steel, N Nerurkar. However, steps to control imports of HR and CR coils and low quality CRGO will help boost domestic steel industry and the Budget initiatives taken to reduce duties by five percentage — from 7.5 percent to 2.5 percent on equipment for setting up or expansion of iron ore beneficiation and iron ore pellet plants, would provide incentive to use iron ore fines which are currently not being utilised fully.


On the other hand, the iron ore export tax staying at the same position and some relief given to the value addition process, the industry focus would remain on the domestic market as the Budget did not impose any export duty on iron ore pellets. The proposals would save project costs commented, P. Madhusudan, Director -Finance of RINL, adding that Budget proposal would reduce the project cost by around 5 percent.

Likewise, for the cement industry, the proposal to increase the ad valorem component of exciseduty is likely to increase the effective excise duty by 1 to 1.5 percentfor most cement companies. The proposal to exempt imported non-coking coal from basic customs duty is expected to increase operating profitby 1.5 percent at the industry level. Cement manufacturers in the country have lost no time in announcing price hike between Rs.7 to Rs.10 for a50 kg bag on the plea that this is due to altering of methodology to levy exciseplus increase in base exciseduty ratesfrom 10 to 12%, necessitating the increase.

The abolition of import duty on thermal coal is likely to benefit mining companies. A reduction in the basic custom duty on machineryand instrumentation required for surveyingand prospectingfor minerals such as iron ore and increased infrastructure spending are the other positive developments for the mining sector. As far as the metal sector is concerned electrical steel manufacturers could raise public debt at competitive rates, but they appeared concerned on availability of foreign funds through external commercial borrowing (ECB).

Ensuring availability of low cost funding to infra sectors including power, aviation, roads and bridges, ports and shipyards, affordable housing and dams, the rate of withholding tax on interest payments on external commercial borrowings (ECB) has been reduced from 20% to 5 per cent. The investment linked deduction of capital expenditure incurred in segments like cold chain facility, warehousing, hospitals and affordable housing has been enhanced from the current 100% to 150%, here again the move will go a long way helping these segments to improve their financial health.

Making sufficient funds available in the rural heartland of the country, the Regional Rural Banks have been given a short term credit refinancing fund extension of capitalisation for two more years. The process of capitalisation of 40 financially weak RRBs has been initiated across states. In this connection, a short-term RRB Credit Refinance Fund is being set up to enhance the capacity of these banks to disburse short-term crop loans to small and marginal farmers. The Budget has allocated Rs.10,000 crore to National Bank for Agriculture and Rural Development for refinancing RRBs through this fund. Of the 82 RRBs in the country, 81 are already under the core-banking network.

For the oil & gas sectors the Budget proposals include supply custom duty free LNG to power generation and for the use of general public and it is also abolishing five per cent import duty on liquefied natural gas. However, industrialists are not satisfied with the move and they observe that it seems more political than anything else. In fact, the industry was expecting that import duty on LNG will be across sectors, a move that will not only benefit the importers but also consumers like sponge iron and fertiliser sectors, among others. The budget announcements will have far-reaching measures in terms of rationalisation of import duties on coal, LNG and mining equipment, measures to ensure increased fuel availability by giving thrust to coal mining and reduced cost of borrowings for this capital-intensive sector.

In an attempt to attract private investment, the Government has expanded its Viability Gap Funding (VGF) scheme to sectors including warehousing storage, terminal market, irrigation, oil and gas storage facilities. In new norms, the government has allowed private player to invest, develop and operate a Government infrastructure project. The scheme is applicable to infrastructure projects undertaken on public-private partnership (PPP) basis. In fact, this scheme serves a dual purpose — helps to create infrastructure by providing a subsidy to private companies. Under the scheme, Government invites bids from companies by keeping the subsidy sought as the bid parameter. The bidders who seek minimum subsidy — also called viability gap fund — are given the rights to build and operate the infrastructure. Prior to this, the rights to operate the infrastructure are usually given out for a pre-determined concession period. For the highways and ports sector — where PPP is already underway — the concession period runs into the long term. But now on this has been decided to make irrigation (including dams, channels and embankments), terminal markets, common infrastructure in agriculture markets, soil testing laboratories and capital investment in the fertiliser sector eligible for viability gap funding.

Meeting shortage of skill across infra segments, Finance Minister in his Budget proposals has allocated Rs.1,000 crore to the National Skill Development Fund for the current fiscal. The impetus would enable the National Skill Development Foundation taking up more projects. In 2011-12, the National Skill Development Corporation (NSDC) approved 26 new projects, doubling the projects sanctioned since 2009 to 52, with a total funding commitment of Rs.1,205 crore. In 10 years, these projects are expected to train 6.2 crore skilled manpower augmenting vocational training capacity by 1.25 crore per year. Apart from this, the finance minister proposed a separate credit guarantee fund to improve institutional credit for youth. To date, NSDC partners opened 496 permanent and 2,429 mobile centres in 220 districts across 24 states. More than 89,500 people have been trained and almost 80% employed. Apart from this, the Centre is also running "Himayat" with the aim of training 1 lakh youth in J&K and finding jobs for them in the next five years.

Though the Budget for 2012 was devoid of any raft measuresthat could tide over the current inflationary trends and usher in an era of economic reforms, the fillip side of the budgetis the focus on infrastructure development and the much needed boost to development of roads and highways, housing paving the way for enclusive growth thereby placing the economy on the higher growth path. In fact, the highlights of the Budget includes increase in the excise duty across the board, a similar hike in service tax barring 17 items, bringing many services under service tax net, which is expected to increase the manufacturing cost and price for industries and consumers alike. Justifying the hikes, quoting from the William Shakespeare 'Hemlet' the Finance Minister said, "I must be cruel to be kind, but these steps are the needfor the good of the economy." Economic policy, like medical treatment often requires us to do something which in the short- run may be painful but is good for us in the long-run, the Finance Minister added.

Mr Vipin Sondhi, MD and CEO JCB India Limited
"My initial reaction is that initiatives like liberalizing the External Commercial Borrowing (ECB) rules and boost to investment particularly in infrastructure sector, Relief in indirect taxes to sectors under stress; viz. infrastructure, manufac- turing, mining, roads,…get duty relief are a few positive signals. Also the outlay for Infrastructure of Rs.50 lakh crore in 12th Plan, is another step towards growth with encouragement to the private sector." However, the excise-related proposals would push up prices thereby putting further pressure on an already difficult demand position.

Mr. A.M.Muralidharan, Managing Director, Volvo India Pvt Ltd
The Union Budget 2012-13 has turned out well overall for the infrastructure industry. The Honourable Finance Minister has proposed good steps bringing cheer to the infrastructure and equipment manufacturer segment.

The government's plan to invest Rs.50,000 crores in infrastructure will encourage more projects on PPP model for massive infrastructure development. The signs for the road construction segment are very promising considering the government's plan to invest Rs.10,000 crores and introduce external commercial borrowing. It has planned 8800 kms of road construction, which will provide more avenues for projects.

The implementation of the GST model will be watched carefully. With the government still in consultation with different states, we hope to see a practical road map for GST by August. This will be a huge boost for equipment manufacturers as it will reduce taxes on sales of equipment between states.

The mining sector has also seen some very bright spots with the exemption of customs duty on coal. I believe this is one of the high points of the budget since mining companies will look at venturing into newer projects. Another key point which will have a positive impact on equipment companies is the reduction of tax on iron ore equipment from 7.5% to 2.5%.

Overall the budget resonates well with the verticals we cater to. In the coming year, I hope to see positive developments in the equipment manufacturers industry.

Mr. Raghavan Ramaswamy, VP, Sandvik Construction, India
"To a large extent our (Sandvik) market area is heavily dependent on market sentiments. The present Union Budget is a reform-oriented budget. I think Mr. Mukherjee's budget provides room to encourage investments and increase consumption which is a plus point for a growing economy like ours. Furthermore, the announcement related to infrastructure projects and duty exemption provided to various equipment used in such projects is a welcome sign and will provide the right impetus to organisations like us."

Mr. Tushar Mehendale, Managing Director, ElectroMech"Overall the budget is a tepid budget with no big-bang measures that ensure the promised high growth trajectory that India has been waiting for patiently for the past couple of years. Although it has been promised that the GST will be effective in August 2012, it should not eventually turn out to be another failed promise as has happened in the past. One good development is allowing of ECB in sectors like road construction and the target for highways development in FY13. This coupled with increase in the tax free infrastructure bond allocation to Rs.60,000 crores will definitely help in spurring some growth in the infrastructure sector."

Mr. Anand Sundaresan, Managing Director, Schwing Stetter
"The increase in service tax and excise duty from 10% to 12% was expected and didn't come as a surprise. There are a lot of positive points to boost the infrastructure industry like ECB on low cost housing, irrigation and dam projects. The increase in Infrastructure debt funds to 60,000 crores. The announcement of the Delhi–Bombay freight corridor with the Japanese investment of 4.5 billion $is a good boost for theinfrastructure industry. The implementation of 8,800km of National Highways willbe an advantage to the industry. Many sops have beengiven for the development of power sector. These are some of thepositive indicators towards the thrust on infrastructure development. The most important is to implement them on time. Many projects have been identified and are waiting forbureaucratic clearance or land acquisitions. Clear policies and reforms should be made for faster implementation of these infrastructure projects. The infrastructure industry and construction equipmentmanufacturers are looking at the big chunk coming out of the 1trillion $ investment on infrastructure proposed in the 12th5 yearplan. 50% out of this has to come through Public Private Partnership projects as against 30% in the 11th 5 year plan. We have not achievedthe PPP target of the 11th Five year plan, therefore, if the governmentwants to attract the private investors for the PPP projects, thenecessary reforms and policy changes should be brought in immediately."

Mr. Ayodhya Rami Reddy, Chairman, Ramky Group
"The Budget this year gives a good road map for the infrastructure sector. Ramky Group welcomes the government's initiatives and commitment to build road infrastructure to the tune of 8,800 kms and double the tax free bonds to the tune of Rs.60,000 crore for financing infrastructure projects. Ramky also appreciates government's stand on containing fiscal deficit to 5.1% by FY13 and we are positive that the government would be able to achieve the same."

Mr. Rajesh Sharma, Vice-president sales, ECEL
.‘The budget has provided overall a big thrust to infrastructure and Reality sector by addressing the vital need of mobilising more funds for these sectors.

Measures such as doubling tax free infrastructure bonds from Rs.30000 Cr to 60000 Cr; allowing External commercial borrowing for operation and maintenance of Highways, developing low cost housing and part financing rupee debt of existing power projects; wide basing Viability Gap funding to cover more sectors such as irrigation are bold steps for augmenting resource mobilisation for Highways, Railways, Power and Housing sectors. Also, Budget has announced coverage target of 8800 kms of highways in the new fiscal as well as reaffirmed investment of Rs.50 lac Crores in infrastructure sector in 12th plan with an emphasised participation through PPP. Therefore, with all these provisions, it is a budget which is aimed at renewing focus on much needed infrastructure development.

It is true that increased rates of excise duty and service tax will add difficulties for manufacturers and customers of construction equipment, who are already reeling under the impact of higher input costs and interest rates, and it may have an adverse impact on demand in the short term. However increased excise and service tax in tandem should be seen as a positive step towards the implementation of GST which one can really hope to happen by April 2013. Overall, the provisions on mobilising resources will fuel the growth in infrastructure and construction sector in a medium and long terms which is a good news for the equipment suppliers.'

Mr. Raja Kochar, Managing Director – India, Eaton Corporation
"We see it as a status quo budget. We were looking for more concrete initiatives that could quickly propel India's growth and more specifically, increase manufacturing from 16 to 25% of GDP. We hope the Government can progress on the implementation towards GST and early enactment of DTC to make this a truly favorable budget. The amendment to section 9 (transfer of shares) is a cause of concern for Eaton and other MNCs doing business in India."

Mr. Anuj Kumar Choudhary, Director, Panchsheel Buildtech Pvt. Ltd
"Allowing of borrowing from overseas institutions for affordable housing projects is a welcome step. It will increase the fund flow which will help ease out the real estate sector and there can be increase in the affordable housing projects. The extension of the 1% interest subvention scheme for affordable housing will definitely help buyers and it will come as big relief for them. But our long pending demand to give industry status to real estate sector once again has been not addressed."

Mr. Ashwani Prakash, Executive Director, Paramount Group of Companies
Real estate sector has once again been deprived of the "industry status" which would further deprive the sector of the natural benefits, which it could have availed if given the "industry" status. No doubt the ultimate beneficiary in that case would have been the end users/customers. Proposed Budget 2012-13 has allowed FDI in affordable housing sector which is likely to increase the fund flow in this area and ease out the real estate sector. Extension of subvention scheme for another one year is definitely a support for the real estate; however increase in loan limits was expected and should have been given by the honorable finance minister to give a respite to the real estate sector. It is also notable that the finance minister has increased the service tax and also the excise duty which would directly make an impact on various inputs of real estate which ultimately is likely to make an impact on the price of the properties.

Mr. R K Arora, CMD, Supertech Limited
"The overall budget for the real estate sector is not a very welcoming one. There are some positives but it again has not addressed some of the long pending demands of this sector. The Proposed Budget 2012-13 has allowed borrowing from overseas for affordable housing projects is a welcome step. It will definitely bring fund flow and can also boost the affordable housing segment.The extension of interest subsidy of 1% on housing loans of up to 15 lakh is a positive step but an increase on housing loans of up to 25 Lakh will further boost the demand for low-cost housing and will help buyers at large. The increase of service tax and the excise duty would directly make an impact on real estate sector which ultimately have an impact on the price of the properties and will affect the customers. Also our long pending demand to give industry status to real estate sector once again has not been addressed."

Mr. Anil Sardana, Managing Director, Tata Power
"Tata Power welcomes the Hon'ble Finance Minister's recommendations for economic recovery, spurring growth, removing bottlenecks and promoting Public Private Partnerships. The extended tax incentives, the decision to allow ECBs, and reinforcement of intention to introduce DTC and GST in the near future should create a positive investment climate. In line with Tata Power's focus and investment plans in the renewable energy space, we welcome the government's continued interest in giving a boost to solar energy projects. The waiver for thermal power companies will be beneficial for upcoming projects. The removal of customs duty on imported coal, natural gas, LNG, and the incentives for the mining sector will marginally improve coal supply, but is still a far cry from achieving adequate fuel security. However, other measures including the Fuel Supply Agreements with CIL should provide some relief. However, we expect stronger sustained steps to be taken beyond the Budget, to address the core issues faced by the power sector."

Mr. David Walker, Executive Director, SARE Homes
"Union Budget has made modest efforts to address the real estate sector with measures like offering 1% tax rebate for home loans of up to Rs.15 lakh on homes costing up to Rs.25 lakh and allowing External Commercial Borrowing (ECB) for affordable housing. Controlling the fiscal deficit will pave the way to lowering of interest rates which will revive real estate sales. Several positives steps taken to revive the ailing infrastructure would of course come as a boost to the economy."

Mr. Jehangir Ardeshir, President & Managing Director, Terex India Private Limited

• Specific measures announced by the Finance Minister to boost investment in infrastructure is welcome.
• Doubling of allocation for tax free infra bonds will help in creating access to funds for infra projects.
• The decision to boost road infra with 8000 kilometers of roads being added during the coming fiscal is noteworthy. But this will need additional reforms from the government to be completed on time and as per required norms.
• Import duty exemptions for road construction equipment will discourage indigenous manufacturing and technology flow-in will become slower
• It is good to see the focus on rural infrastructure development. The benefits announced on expenditure on R&D and skill Development are positive developments towards bridging the skill gap.
• Power plants will benefit significantly from access to ECBs, tax holiday for power plants that commence generation from 31 March 2013.

Mr. Brotin Banerjee, MD & CEO, Tata Housing
"The Union Budget 2012-13 throws up a mixed bag for the real estate sector. The Government's initiative to make affordable housing available to a larger section of the society has only been met partially. Initiatives such as External commercial borrowing for the affordable and low-cost housing segment will help the sector to tap long-term funds and help ease the liquidity in the sector. Extension of the 1% interest subvention scheme for affordable housing will help the buyers to avail a loan limit of Rs.25 lakh. Also the measures to increase funding for highways and other infrastructure will help put more territories on the real estate map. However, the demand of increase in the limit on tax deduction available on home loans interest from current Rs.1.5 lakh remains unanswered. The Union budget has no real measure for the real estate sector as most of the industry expectations have not been met. The most important demand across all real estate companies that of an industry status being assigned to the sector has been long pending as well."

Mr. GVK Reddy, Chairman & MD, GVK Power & Infrastructure
"I congratulate the government for a balanced budget during the challenging times. It is positive, broad- based and an inclusive Budget that endeavours to address crucial reforms for development. Overall, the Budget is growth-oriented and aimed at sustaining the growth impetus seen in 2011, while giving main emphasis to sectors such as agriculture and industry. This, according to me is integral to support India's development ambitions in the long term."

K Ravichandran, Sr. VP, Co-head, Corp Sector ratings, ICRA Ltd
Infrastructure sector is one of the few beneficiaries from the proposals of the Union Budget 2012-13, which has been hit on multiple fronts in the recent past such as land acquisition, policy paralysis, delays in environmental approvals, high interest costs, elongated working capital cycle, and weakened credit quality of State Utilities. The main prescription of the Budget for the sector is making funding easier for the sector participants through relaxation in ECB guidelines, doubling of limits for infrastructure bonds (Rs.60000 cr) and expanding the scope of sectors which are eligible for viability gap funding. From the sponsors' perspective, the Budget has also good news by doing away with the cascading impact of Dividend Distribution Tax (DDT) on multiple layered SPVs. As regards impact on the specific sectors, the proposals have sought to mitigate the inflationary impact on the fuel costs front for the power generators by exempting from customs duty on steam coal and LNG. Importantly, the sunset clause for tax holiday under Sec 80 IA has been extended by a year upto March 2013, which will benefit several developers facing delays in project commissioning. As regards the road sector, the Govt seems set to continue the momentum on project awards as seen by its decision to award around 8800 km of projects in FY13, an increase of 20% over FY 12. In the case of port sector, no material new announcements have been made save for doing away with the CVD on the employment of imported dredgers, which should lower the dredging costs for ports marginally. Overall, while the aforementioned proposals are positive for the growth of the sector, it will continue to face headwinds in the near term as other challenges will persist unless further reforms are undertaken.

Mr. JR Tanti, Managing Director, Synefra E&C
"There has been good positive news for the infrastructure space and we hope to see some robust development activities in coming years. First, the investment in the 12th Plan period is expected to go up to 50 lakh crore, which is promising. With half of this investment expected from the private sector, the targets and challenges are set for large developers and other players. Secondly, a great boost will come from the proposal for tax-free bonds of Rs.60,000 cr. dedicated for funding infrastructure projects, which we expect will ease the financing pressures. Urban infrastructure would be a large beneficiary of the above bonds automatically, with some promise for developers in affordable housing projects and some reduction in withholding tax in the External Commercial Borrowings (ECBs). The Real estate sector has not received as much as desired in this year's budget however good demands stimulated by overall growth forecasts and emphasis on urban infrastructure projects, we hope will have a cascading effect."