Budget–2011-12 : Marshals Resources for Massive Infra Build–up

Pulling out all stops and launching a slew of measures matching infrastructure to the targeted GDP growth rate, the government in its current Budget proposals fired all cylinders blasting financial bottlenecks hampering free flow of funds to the infrastructure and construction sector considered the backbone of Indian economy. In pursuit of its targets, it effected the highest ever 23% increase worth Rs.2,14,000 crore in allocation of funds for infrastructure as against Rs.1,73,552 crore allocated in the last fiscal. In totality, for the new budgetary initiatives, the government fired a barrage of bonds targeting higher investment, massive infra build up and faster project delivery mechanism triggering multiplying impact on job generation, increased income and heightened demand for goods and services, which ultimately leads to higher GDP growth, reports Jeet Singh.

Trendsetter

In the current volatile world economic scenario, where developed world is still struggling to shed the strong grip of global financial turmoil, displaying amazing one-up-men-ship Indian economy after undergoing initial tremors, came out unscathed and made the global economic forecasters to beat the dust. It not just swiftly shed the shadow of the worst recession of the decade but bounced back vibrantly to a spectacular growth start. The amazing upturn made the World Bank and International Monetary Fund to come out of their initial inhabitations and openly declared that Indian economy has not just staged a spectacular turnaround but, in fact, pulling the global economies out of the downturn and slowly leading them on the growth trajectory.


That apart, they also admitted that acting exactly like a fulcrum Indian infrastructure remained the main driving force behind the spectacular showing of the economy triggering high level of GDP growth. In totality, the huge tracks of green pastures that it offers has tempted the UN, its sister bodies and emerging economies like Indonesia, among others, to pump their pension and provident funds in India and pick a pie out of the famed Indian infrastructure sector.

Tracing Trillion Tactfully

In its unfailing quest to generate $1 trillion investment for the infrastructure sector in the 12^th Plan period, the government in its Budget proposals has affected a fiscal consolidation by way of offering multiple tax free infra bonds, creation of infra debt funds, reduced FIIs withholding tax rate to 5 per cent from the current 20% and pushed the limit for them in five years tradable infra bonds from $5 billion to $25 billion per annum. Ensuring greater participation of foreign institutional investors (FIIs) the government has hiked investment limits for corporate to $40 billion from the current $20 billion. Likewise, domestic investors have also been allowed to invest Rs.30,000 crore in tax free bonds as agencies including NHAI, IRFC and HUDCO has also been permitted to sell its tax free bonds. In the process, Indian Railway Finance Corporation (IRFC) has targeted Rs.10,000 crore, NHAI Rs.10,000 crore, HUDCO and Port & Shipping sectors are also targeting Rs.5,000 crore each. Disbursement targets for the India Infrastructure Finance Company Limited (IIFCL) have been raised by Rs.5,000 crore. In addition, the government has also extended income tax exemption on tax saving in infrastructure bonds up to Rs.20,000 for a year and setting up an infra debt fund to promote foreign investment in the infrastructure sector. MSMEs have been provided with a provision of Rs.5,000 crore funds for refinancing incremental lending.

Highways High on Agenda

Putting the roads and highways sector on the fast track of development, the government in its Budget proposals has permitted NHAI to raise funds to the tune of Rs.10,000 crore by way of tax free bonds and extended exemption of customs duty on tunneling boring equipment and also to other road ingredients. The hiked amount would take care of investment they have to make in the form of viability gap funding (VGF) of the projects and annuity bill the nodal agency is paying to developers. The move is very encouraging as it would lessen the burden of NHAI enabling it to pay just 2–2.5 percent less interest than what it usually pay to financial institutions. Moreover, the budgetary proposals of allowing access to foreign funds set to become relatively easier for road builders with the Budget allowed FIIs investments in bonds of unlisted Special Purpose Vehicles (SPVs) of infrastructure companies.

Making most of the emerging scenario, the highway developers are currently scouting for partners in the global market to take over operations, maintenance and tolling (OMT) of the Indian national highways. The road developers have set their eyes to manage OMT business in the Indian road sector as the country is all set to award the construction of 37,050 km of national highways by 2013-14. As per original plans, over 60% of the highways will be operated, maintained and tolled by private players and they will become operational within three years of their construction. Official sources claimed that highway OMT services market will assume a size of Rs.5,000 crore by 2016 with the NHAI getting set to award OMT work even on the existing roads, which are currently being maintained by the government. The government has also planned to push the current national highways network of 71,000 km to 1.31 lakh kilometer, which also included states highways by adopting the OMT model. As per initial estimates, NHAI has targeted 10,000 km of roads to be awarded during the 2011-12 fiscal thereby pushing the highway business to new highs.

Full exemption of customs duty, which is being proposed on bio-asphalt plant and specified machinery largely used in tunneling, boring and construction of national highways, is exactly what the construction industry needs today, said an expert.

Real Estate

Real estate builders across the country are upbeat on the Budget proposals extending scores of concession for low cost housing segment. The Finance Minister in a statement has said that in view of the need of low end housing the government proposes investment linked deduction to businesses engaged in developing affordable housing units but the exact percentage of deduction is yet to be announced by the government.

Boosting housing across the country, the government has set up a Rs.3000 crore fund, increased limit to Rs.15 lakh from the current Rs.10 lakh for interest subsidy and pushed priority home loans limit from the current Rs.20 lakh to Rs.25 lakh and in view of this huge demand for steel and cement is on the cards. According to available stats, the country needs about 24 million houses and the deduction in affordable segment will accelerate investments in the segment. The move will attract many developers to shift their operations to the affordable segment as investment linked deduction proposed in the Budget on investment in the sector is going to be substantial.

Meeting the housing shortage in the country, the government has made a provision of offering higher loans at lower interest rates. Normally loans falling under priority sector less than 25 lakh are priced more attractively as such loans are cheaper by 50 basis points than other housing loans. In the emerging scenario of housing sector, a borrower seeking 25 lakh loan will have to pay Rs.2.5 lakh upfront thereby saving some money on margin funding and on the other hand those seeking Rs.30 lakh loans will have to shell out Rs.6 lakh as upfront payment and this will give a huge push to affordable housing.

"Scores of stimulus packages announced for affordable housing sector and investment linked benefits to builders will push building activities apart from triggering quantum jump in home buyers boosting demand for affordable housing," insists, Chairman and MD, Marg Ltd, GRK Reddy.

"The available trends indicated that the Indian realty sector is fast turning the top most choice of global investors," said Global Head, Residential Real Estate, Night Frank, Patrick Ramsay.

The available trends indicated that the Indian realty sector is turning the top most choice of global investors, said Global Head, Residential Real Estate, Night Frank, Patrick Ramsay. Drawing comparison between India and China, the group of high net worth individuals (HNIs) is smaller in China as they invest as much as 40% of their wealth in residential real estate. In China, the realtors are facing the lurking fear of property bubble busts and Indian property market on the other hand appearing vibrant as there is a large number of transactions in residential real estate in bigger cities in India as compared to China.

Airport Infra Goes Global

The huge budgetary allocations for infrastructure sector and easing norms for FIIs has indirectly extended invitations to foreign investors and the move in turn will help a lot the Indian aviation sector. The sector has already witnessed a $9 billion investment in the past decade and is awaiting booster worth $30 billion, targeting 350 million flyers per annum in the next decade. In addition, AAI has earmarked Rs.25,000 crore of which Rs.12,000 crore is being invested on building state-of-the-art airports in tier-II and tier-III cities. For boosting regional connectivity, it is also providing ultramodern facilities including cargo handling, multi-level parking, hotels and creating related infrastructure in city side areas across airports in smaller cities on PPP module at an investment of Rs.12,434 crore.

Addressing capacity crunch concerns, the government has decided to set up world-class airport at Navi Mumbai with an investment of Rs.9,970 crore and the first phase of the airport would be completed by 2015. Similarly, Calcutta International Airport, which also faced capacity constraints is under up-gradation on war footing. Likewise, the GVK Group, which built the Bangalore International Airport (BIAL) is expanding the terminal-1 of the airport to accommodate the Airbus A380 for which the company is doubling its capacity on the passengers' terminal. The strategy of the AAI apart from decongesting the metro airports is for pushing regional connectivity as small towns including Patna, Nagpur, Dibrugarh, and Lucknow has recorded over 72% growth in domestic traveling and big airlines including Air India, Jet and Kingfisher are increasingly looking for small cities for market share and introducing low cost carriers (LCC) to tap the market.

The AAI in joint venture with the Punjab government is building Chandigarh International Airport, which is expected to be commissioned by 2012-13. The Punjab government is also setting up a greenfield International Airport in Ludhiana entailing Rs.17,500 crore investments. The agency has targeted to build these facilities at 35 non metro airports on a combined land parcels of about 300 to 400 acres and in the first phase of the project the authority has targeted airports in cities including Jaipur, Lucknow and Ahmedabad. The agency has also identified locations including Kanur in Kerala, Mopa in Goa while Kolkata and Chennai airports are being handed over to airport builders on lease for a period of 30 years. Other airports include Goa, Jammu, Bhopal and Kashinagar in Uttar Pradesh and Mangalore. Himachal Pradesh government is setting up its first international airport at with investment of Rs.1,000 crore in Solan district of the hill state on PPP model. The Airport Authority of India is building greenfield airports at Sriperumbudur in Andhra Pradesh. Apart from the Navi Mumbai, plans are afoot to set up regional airports in areas including Shirdi, Pune, Solapur Amravati, Gadchiroli, and Dhulia.

Empowering Power Sector

In order to provide level playing field in the energy sector, the relief announced in excise duty exemption for power firms supplying gear for the expansion of existing mega or ultra mega power plants, will go a long way to push power generation. Currently, these capital goods enjoy concessions in the forms of basic customs duty of 2.5 percent and full exemption from CVD. In addition, tax holiday under Section 80-1A of the income tax Act has been extended by one year. India's powered sector is going strong as per available reports, power generation to the tune of 15,000mw is being added during the current financial year thereby pushing the total power capacity to 1.75 lakh mw by the end of this fiscal. As on December 31, 2010, country had an installed generation capacity of 1,67,077mw and the government has targeted 78,700mw of capacity addition during the Eleventh Plan period. In the total country's power capacity, thermal power has a lion share of about 60,000mw, followed by hydro with 15,627mw and nuclear with 3,380 mw.

Duty exemption on imported coal from 5 to 2.5 percent and lifting excise duty on equipment for ultra mega projects will benefit the power sector immensely, commented MD, Tata Power, Anil Sardana.

Ensuring sufficient funding availability, the PFC has issued infrastructure bonds to raise Rs.5,300 crore.

Clean Energy

To achieve the laid down targets in the green energy segment, the government in its Budget proposals has made a provision of Rs.253.06 crore especially for the Research and Development purposes as against Rs.199.74 crore allocated during the last three years. The latest provision is a part of the special emphasis on efficiency improvement and cost reduction of new and renewable energy systems and devices. In this connection, the government on its part has launched JNNSM to create conditions through rapid scale up in capacity and technological innovation to drive down cost towards grid parity. With the available parity level of fiscal and financial incentives, the other renewable power sectors including wind, small hydro, biomass cogeneration, combustion and biogas based power have nearly achieved the grid parity. Pushing the share of solar and wind energy in the total power generation capacity of the country, the Power Finance Corporation (PFC) has sharpened its focus on renewable energy generation. In this connection, the company is setting up a separate arm to take care of the renewable energy projects and also two other subsidiaries whereby the former would handle equity funding in the power projects and the latter will provide consultancy services on mergers and acquisitions.

"India despite being the fifth largest wind power market in terms of installed capacity it is growing much faster at over 15% per annum than most markets across the globe. The current investment in the sector is about $1.9 billion but it is set to touch about $4 billion by 2015," said Head R&D Clean Tech Bloomberg, New Energy Finance, Ashish Sethia.

The government has launched a National Solar Mission aiming at feeding 20,000 mw to the national grid by 2022. Shortly after the announcement of the mission, at least two dozen companies including those in the public sector and Silver Smit India have announced investment proposals worth Rs.100,000 crore in the next half decade. The Indian Oil Corporation (IOC) has launched Rs.700 crore green energy plan including installation of solar energy panels across its over 18,100 retails outlets across the country at an investment of Rs.500 crore, besides Rs.200 crore an investment in wind and solar energy generations plants. In addition, Suzlon Energy and Capro Group forging joint venture for 3,000mw capacity wind power farms costing $3 billion. Similarly, the Moser Baer has drawn up plans to invest Rs.400 crore in the expansion of crystalline silicon capacity of its photo voltaic (PV) to 240 mw from the current 14mw. The Adani Power is investing Rs.500 crore on a 40 mw solar project in Banaskantha district of northern Gujarat. Apart from this, the Special Purpose Vehicle (SPV) of Lanco Infratech Limited, Lanco Solar, is setting up a polysilicon and solar water manufacturing base at Randaspur village in its notified SEZ in Cuttack district of Orissa.

Huge Push to Rural Infra

In an attempt to save over 40% agricultural produce including fruits and vegetables getting perished every year due to huge infrastructure deficit in rural India, the Union Government in its Budget has proposed granting infrastructure status to cold storage and warehousing sector opening up huge infra investment avenues there. In the process, it has slashed basic customs duty on specified machinery including all cold storage equipment from the current 5 per cent to 2.5 percent and also on micro irrigation equipment from 7.5 percent to 5 percent. The proposal has cheered players keen to set up cold chains or refrigerated warehouses as they can have easy access to secure much needed foreign investment to carry out their projects, which would also help in effectively checking the double digit spurt in food inflation. Realizing that the GDP growth only cheers cities settlers, the government by launching such schemes is taking along the rural masses living in abject poverty. To further push rural infrastructure, it has allocated a staggering sum of Rs.58,000 crore under the Bharat Nirman.

In such a situation the world is today, India has succeeded in achieving high growth rate, which is an excellent example of excellently executing the management of the economy with active participation of the private players, greater thrust to rural sector by eliminating infrastructural bottlenecks was really the need of hour, observed Chairman, Birla Group, S K Birla.

Steel & Cement

In the Budget proposals, the stainless steel producers got a shot in the arm with the removal of import duties on stainless steel scrap thereby lowering the input cost and steel industry is also going to benefit from the reduction of customs duty on nickel and this will push the domestic production considerably, said SAIL Chairman C S Verma, adding that slapping higher export duty on iron ore has been a long pending demand from the domestic steel maker and that withdrawal of export duty on pellets should encourage installation of pellet plants by mining companies and this in turn again benefit the steel industry. Iron ore is a finite resource and the country needs to preserve it for value addition within the country and the hike in duty would ensure higher raw material availability to domestic steel makers who have been looking for a complete ban on exports, said Vice Chairman Tata Steel, B Mutharaman.

However, steel and cement prices may go northward as the Budget proposed a 2 percent increase in excise duties on steel products and in regard to cement, it has proposed to replace the existing dual excise rates on cement based on selling price with a single rate which will result in pushing the retail price of the product. In fact, higher exports duty slapped on iron ore will lead to lower domestic prices for steel indirectly benefiting the construction sector to some extent. Another move that indicated tacit support for the steel industry include the reduction in ferroalloys import duty from 5 percent to 2.5 percent, however duty rates remained unchanged at 10%.

Commenting on the government move in the cement sector, President Cement Manufacturers Association, (CMA) Vinita Singhania said that though abatement of the excise duty has been the long standing demand of the industry but the specific component is still very much on the higher side and this will result in the duty going up over Rs.8 a ton and about Rs.4 per bag at the current prices. In view of the current cement scenario prevailing in the country, the industry had registered a demand growth of just 2.6 percent in December as against about 8 percent during the same period last year. It is expecting a growth of just seven to eight percent this fiscal as against over 10% it achieved in the preceding financial year.

Rail & Metro

In the current Railways budget, the government has given greater thrust to infrastructure projects by laying new lines with a length of 1,000km at a cost worth Rs.9,830 crore and has proposed the highest ever annual planned investment worth Rs.57,630 crore for the fiscal. The planned investment would be financed through a gross budgetary support of Rs.20,000 crore and other sources on the PPP model. In the process, Rs.5,406 crore and Rs.2,470 crore will be granted for doubling gauge conversion to complete 876 km and 1,017 km rail lines respectively. For meeting shortage of wagons including coaches and locomotives, a sum of Rs.13,820 crore has been provided. In the Budget proposal, the South Central Railways grabbed a significant slice of infrastructure projects, as the zone garnered infra projects including new lines and doubling of existing ones to the tune of Rs.3,666 crore.

Similarly, the Dedicated Freight Corridor Corporation of India (DFCCIL) with a length of 1,490km involved a whopping investment of Rs.4,23,000 crore comprised building of nine large industrial zones, high speed freight line, three ports, six airports, a six lane intersection, free expressways and also 4,000mw power plant. The DFCCIL has recently tied up Rs.30,000 crore funds with Japanese bank for building its western corridor connecting Mumbai and Delhi. The western stretch which would be built in two phases and first phase covering 1,000km would connect Rewari in Haryana with Vadodara in Gujarat and the second will provide connectivity multiple hubs including Jawaharlal Nehru Port in Mumbai to Vadodara, and Rewari to Dadri in Uttar Pradesh. The work for civil engineering on tracks has already been awarded. Similarly work for the 1,800km stretch of eastern corridor connecting Ludhiana in Punjab to Dankuni in West Bengal has already been started. The project connecting 120km line between Mughalsarai in UP to Sonnagar in Bihar has also been started with the railway contributing Rs.700 crore from its internal resources. Both these corridors are slated to be commissioned by 2016-17 and will go a long way easing freight movement as the existing trunk routes connecting these areas are highly saturated.

Injecting multiple financial stimuli into infra sector will also push the metro connectivity in tier 1 and tier II cities across the country. In this connection, the central government has recently agreed to share the burden of Rs.5,511 crore, the escalated cost of the 42km Bangalore metro project. Similarly, the 72km long Hyderabad metro project is also on the fast track. A consortium of Feedback Venture AECOM Asia and AECOM India has been selected for Rs.12,136 crore project being executed by the L&T Metro Rail Hyderabad Limited. Likewise, the Delhi Metro is all set to enter into its phase III after completing the construction of phase-II in which it commissioned five new metro corridors with a length of 66km. The Gujarat Monorail projects is also moving on fast track as after securing the contract of Mumbai Monorail project, the L&T is all set to bag the new project entailing an investment of Rs.5,000 crore. In addition, the long pending Mumbai Trans Harbor Link project has also been cleared by the state government. Chennai metro and Jaipur metro projects also moving on fast track as their execution activities are currently in full swing.

Special Economic Zones

Although levying minimum alternate tax (MAT) on SEZ developers will fetch a sum of Rs.15,000 crore per annum to government, but players across sectors have unanimously decried the proposal. In the current Budget, the government has indicated to levy 18.5% minimum alternate tax (MAT) on SEZ units and developers. The SEZ developers believed that in case the proposals implemented, it would sound the death knell for the SEZs and have demanded a complete roll back. Even biggies including Reliance, Bharat Forge, Larsen and Toubro, and DLF, Mahindra World City have stalled their projects and are waiting for the government to come out with a clear and firm decision on this score. The physical exports from tax free enclaves in the first three quarters of the current fiscal recorded a quantum jump of Rs.2,23,132 crore thereby clocking a growth of 46.7% as compared to the corresponding period of the preceding year. These export figures were generated by a total number of 130 tax free enclaves that are currently exporting goods to foreign countries.

There are about 580 SEZs being set up across the country, over two lakh hectares of land is being created for mix use to create environment-friendly norms on a massive scale. The country currently has 144 SEZs in operation with over 3,048 industrial units representing a development of about 44,265 hectares and the numbers indicated that the SEZs recorded multifold growth ever since SEZ law came into operation in 2006. The government is currently working on guidelines to set up green special economic zones (GSEZs) across the country and to date over 22 SEZs including 6000 acre in the Sri City SEZ in Andhra Pradesh have already registered with the IGBC which follows grading system rates on SEZs on parameters including energy efficiency, use of on site and offsite renewable energy, reduction in waste generation, green cover, rain water harvesting system and water recycling.

In a latest move, the Haryana government has decided to set up 100 SEZs involving whopping investment of Rs.2,00,000 crore. The state government has already cleared proposals worth Rs.53,000 crore in this connection. In another SEZ project, Oil and Natural Gas Company (ONGC) and Gas Authority of India Limited (GAIL) have agreed to become a co-promoter of 1.1 MMTPA Ethylene Cracker Petrochemical Complex being implemented in Dahej SEZ at a cost of Rs.19,535 crore. This is a very serious matter and the developers are really in a jigsaw puzzle, said Vice Chairman, Export Promotion Council for EOUs and SEZs, PC Nambiar, who is also the Director of Serum Bio Pharma Park, country's first biotech special economic zone.

Port & Shipping

In an attempt to increase country's port capacity to 3 billion tons per annum by 2020, the government in the current Budget has injected stimulus worth Rs.5,000 crore by way of tax free bonds, apart from full import duty exemption on spares and capital goods required for ship repairs units being imported by the ship owners. The initiative in turn apart from boosting the shipping sector will also help small shipping entities engaged in coastal service operations as they will also benefit from the abatement in service tax structure.

It is also in the process of setting up a specialized Maritime Finance Corporation with equity of port and financial institutions to fund the future port projects. The shipping ministry has decided to invest Rs.5,00,000 crore in the sector to achieve the laid down targets apart from initiating various reforms strategies in the country's shipping sector. The allocation of Rs.193 crore to the Visakhapatnam and Morgugao Port Trusts and also Rs.97 crore to the Cochin Port Trust for rail connectivity is also a part of the government's future expansion plans. Pushing its cargo handling capacity from the current 23.78 million tons to 52 million tons by 2015–16, Tuticorin Port is investing Rs.4,360 crore and has approached Official Development Assistance (ODA) of Japan seeking Rs.2,800 crore funds to create outer harbor.

Petroleum & Gas

In order to minimize the impact of higher international crude oil prices of oil companies, the finance ministry has pushed the subsidy payout provision to public sector oil companies instead of reducing duties on petroleum products and crude oil in the budgetary proposal. But in the emerging scenario, the consumers may have to prepare for a higher retail price. The Budget has made available a petroleum subsidy of Rs.23,640 crore, a bit lower than the revised estimates of Rs.38,386 crore. On the expansion side, the oil companies have targeted a whopping investment of Rs.2,00,000 crore to set up new refineries, pipelines network, bottling plants, terminals and petroleum dumping stations in the next five years and are looking forward for a duty cut on crude oil and petroleum products in the current Budget. Now, they have to contend with to increase their borrowings to meet their investment targets as they can ill afford postponing of the planned expansion and upgradation as most of the existing infrastructure is creaking and requires urgent replenishment. Currently, the customs duty on crude oil is at five percent and that on petrol and diesel at 7.5 percent and petrol excise duty remained at Rs.14.35 per litre and diesel at Rs.4.60 per litre. To check the malfunctioning in the kerosene and LPG distribution and misuse of subsidies, the government is moving towards direct transfer of cash subsidy on kerosene for people living below poverty line and a task force is currently working modalities for the proposed system, which is expected to be in place by the end of this year.

Mines & Mineral

In a tacit support to the domestic steel industry, the government has pushed the duty on all variants of iron ore including ore fines and lumps and move on pelletisation will lead to greater value addition in the domestic circle. It has been aimed at preserving country's iron ore reserves for the expected boom in domestic steel demand which is expected to double in the next three years. But on the other hand, the iron ore miners whose woes following the Karnataka export ban have now compounded by the imposition of 20% export duty. The country is the third largest exporter of iron ore with over 50% of 200 million tons of iron ore mined domestically is heading to China, Japan, South Korea, among others. In this context, the hike in duty may make India uncompetitive in iron ore in the international market leading to reduced demand of steel and will push the prices in the international market. On the stats side, the country's iron ore exports for the past three quarters period were down to 17% as compared to the previous year and players in the market felt that the duty hike would turn counterproductive resulting in increased prices of the commodity in the domestic circle. In fact, it is a big dampener on the mining industry, observed President, Federation of Indian Mineral Industries, Siddharth Rungta.

Post Budget Reflections

While balancing his act, the tightrope walker Mr. P. Mukherjee, has attempted to address the key macroeconomic concerns in his budget. Continued focus on infrastructure has ensured an allocation of Rs. 2,140 billion which is 23.3% higher than 2010-11 and over 46% of the planned expenditure. Increase in FII limit for investment in corporate infrastructure bonds by Rs.900 billion and issuance of tax free infrastructure bonds by various PSUs will result in higher investments generation in the sector. Export duty on iron ore fines and humps has been increased to 5% and 15% respectively which will impact the iron ore mining sector. As a welcome step, the stimulus introduced during the downturn by way of excise duty reduction has been extended.

However, on the construction equipment front, an MRP based excise duty has been levied on packaging, branding and labeling of parts of earthmoving machinery with retrospective effect from 29th April 2010. This amount was not recovered from the customers at the time of sale of parts and would cause complications to all concerned."

Vipin Sondhi, Managing Director and CEO, JCB India.

"The recent budget announced by the Govt of India is in line with the expectations of the industry. We expect  this positive and upward trend in Infrastructure investments to continue in the coming years. We in Sandvik look forward to increased potential for our equipment."

Srinivasa Raghavan, Vice-President (Construction Segment), Sandvik Asia Pvt. Ltd.

The government has shown keen interest in promoting Country's Infrastructure by increasing Infrastructure allocation 23% as compared to last year. Also the announcement of Infrastructure Debt fund & the reduction in withholding tax from 20% to 5 percent will encourage investments from overseas investors. We expect that the steps taken by Govt. to promote Infrastructure & Real estate in India will lead to increased demand for modern Construction Equipments"

Michael Schmid – Lindenmayer, Managing Director, Putzmeister Concrete Machines Pvt Ltd

This year's budget will indirectly be a breather for the Construction Industry and the buyers, though, not on a big scale. As per the Government & Financial institution's scheme, builders in Kolhapur, Nashik, Solapur, Aurangabad will get housing loan if the cost of house does not exceed Rs.25 lakhs for dwelling units under priority sector lending. If this happens, the supply of affordable homes will surely go up.

D.S.Kulkarni, Chairman and Managing Director, DSK.

Over the past few months, we have seen the Indian markets underperforming as compared to the most of the emerging and the developed markets. The Indian markets has underperformed on the back of uncertain political environment, negative news flow on scams and raising inflationary tendencies. Inflation figure continues to trend up, largely being dominated by the food prices and commodity price spiral.

However, an important thing which one needs to be aware of that current inflation is more a global concern than just country specific. Economy such as India, where there is broad based income growth, would be more resilient towards rising inflation and consumption patterns may not be impacted.

Key features of the budget are the, swift and broad based growth in 2010-11 to put the economy back on its pre-crisis growth trajectory. Concerns on higher rate of inflation needs to be addressed by improving supply of agriculture produce matching its demand. Corruption as a problem needs to be fought collectively and the gap between the governance and the public accountability needs to be bridged.

Exemption limit for the general category of individual tax payers enhanced from Rs.160,000 to 180,00 giving a uniform tax relief  is most welcome.

Construction industry was hoping for the abolition of SAD amount which would have reduced the complex & delay to reclaim the same. Government is incurring huge expenditure on this transaction.

To stay on course for transition to GST, Conscious decision on implementation of GST will pave the way for an overall growth of the economy. H S Mohan, C O O , Doosan Infracore India Pvt. Ltd.

Generally, the Construction Equipment Manufacturers should be happy with the Budget primarily because there is no change in the excise and customs duty framework. There are various other positives like:

23% increase in the infrastructure spending, spending on DMRC and MMRC phase 3 and phase 2 projects respectively, and budget allocation for Kolkata and Chennai Metro projects. Increase in the budget allocation for infrastructure development in the North Eastern Region.

In addition, the increase of subvention for housing loans up to 30 lacs instead of the existing 25 lacs will help the housing sector. Increase of export duty on iron ore exports up to 20% which is a very bold decision by the government and hopefully will bring down the cost of steel, since construction equipment manufacturers are the largest users of steel.

On the negative side, introduction of 5% excise duty on RMC supplies was unexpected.  We have to see what effects it will have on the ready-mix business. The capital equipment manufacturers were also eagerly waiting for introduction of GST, but there is no clear time limit specified for the same.

A. Sundaresan, Managing Director, Schwing Stetter (India) Pvt. Ltd.

The Finance Minister has been ambidextrous in addressing the development issues in a comprehensive manner while keeping fiscal deficit under control. This Budget has absolute clarity in all round infrastructure development of the country. Therefore, agriculture, health, education and almost all infrastructure areas have been addressed. Extending infrastructure status to cold storage chains, augmentation of storage capacity through private sector participation and making capital investment in storage capacity eligible for Viability Gap Funding are big and bold steps forward. This, along with the increased allocations for the various sub-programmes under Bharat Nirmaan, will boost development of rural infrastructure and lead to long-term solutions in the supply-chain management of agricultural produce.

Mr Hemant Kanoria, Chairman and Managing Director, Srei Infrastructure Finance Limited