Infrastructure gets its due share

The UPA Government seems to be holding the infrastructure segment close to its chest as building the nation, literally and figuratively, implies creation of both jobs and revenue generation.

Increase in infrastructure investment upto 9 per cent of the GDP by 2014, increase in allocations of sectors like power, road, railways, housing and irrigation, consistent focus to develop rural infrastructure, 87 per cent hike in Jawaharlal Nehru National Urban Renewal Mission are some of the highlights in Budget 2009 to overhaul infrastructure facilities.

"Support to socially-oriented and rural development programmes besides other appealing promises like urban and rural housing and simplifying the tax system are all positive signs. The thrust on infrastructure and housing spells well for construction and building materials such as cement and steel," said Sumit Banerjee, Managing Director, ACC Ltd.

However, the industry is slightly disappointed as cement fails to get any respite from high tax rates and duties.

Meanwhile, the marginal increase in personal income-tax exemption on housing loan interest is likely to increase retail housing demand.

The decision to allow India Infrastructure Finance Company Ltd., to refinance 60 per cent of the bank loans for public-privatepartnership projects in critical sectors over the next 15 to 18 months is expected to encourage private sector participation.

"The NHAI allocation upto 23 per cent would surely have an indirect impact on the industry and spur cement demand," said Puneet Dalmia, Managing Director, Dalmia Cement (Bharat) Ltd. Similarly, the full exemption of excise duty on pre-fabricated concrete slabs will boost the construction industry.

The extension of social security schemes to construction workers and mining labourers is expected to provide an indirect boost to the infrastructure sectors.

However, Budget 2009 has no major announcements for the Non-Banking Finance Corporations (NBFCs), who are poised to play an important role in credit delivery to micro, small and medium enterprises, offering services like construction and transportation.

"By not addressing this segment, the Finance Minister has missed out one fundamental segment. The only good news for NBFCs is the reduction of tax rate on lease rentals for plant and machinery to two per cent from the earlier 10 per cent," said Hemant Kanoria, CMD, Srei Infrastructure Finance Ltd.

Source: http://www.expressbuzz.com