Close X
Saturday, October 31st, 2020

The 2010-11 Budget and infrastructure

K.R. Sudhaman** Infrastructure deficiency is one issue that required urgent attention if India were to move on to the high economic growth trajectory of nine per cent or more. One would not be wrong in saying that the 2010-11 Budget has made an honest attempt to work towards removing this bottleneck.

The Finance Minister, Shri Pranab Mukherjee has recognised this fact and said during his budget presentation in Parliament that “accelerated development of high quality physical infrastructure, such as roads, ports, airports and railways is essential to sustain economic growth.”

“While addressing the policy gaps in this sector, I propose to maintain the thrust for upgrading infrastructure in both rural and urban areas. In the Budget for 2010-11, I have provided Rs 1,73,552 crore, which accounts for over 46 per cent of the total plan allocation, for infrastructure development in the country,” he stressed.

The Plan allocation itself has been stepped up to Rs 3,73,000 crore for 2010-11, which is Rs 48,000 crore more than Rs 3,25,000 crore plan spending in the current financial year.

Investment in infrastructure development has gone up from 4.5% of Gross Domestic Product in 2004-05 to 6% in 2007-08. But it is still low compared to Eleventh Five Year Plan target to raise it to 9 per cent of GDP by 2012. Global economic crisis slowed down investments in infrastructure in 2008 because of reduced flow of resources from abroad.

But a conscious effort by the Government to pump-prime the economy though fiscal and monetary stimulus measures has seen revival of investments in infrastructure in the current year. To step up investment in infrastructure the pre-budget economic survey says efforts are needed to channelise long-term contractual savings to infrastructure on a much larger scale.

It is in this context the announcement in the budget that Rs 20,000 additional investment in long-term infrastructure bonds will entail tax benefit to individual tax payers is welcome. This would be over and above the existing limit of Rs one lakh on tax savings. This will help in mopping up more money for infrastructure funding.

Apart from massive step up of plan allocation to infrastructure sector, the Finance Minister said that to make a visible impact in the road sector, Government has targeted construction of national highways at the pace of 20 km per day.

To push the pace of implementation, changes have been made in the policy framework, especially on projects being implemented through public-private partnership.

Also allocation to road transport has been stepped up by 13 per cent to Rs 19,894 crore from Rs 17,520 crore.

Railways too get Rs 950 crore more budgetary support at Rs 16,752 crore for modernisation and expansion of network

To complement the dedicated freight corridor, the Delhi-Mumbai industrial corridor project has been taken up for integrated regional development. Preparatory activities have been completed for creation of six industrial investment nodes with eco-friendly world class infrastructure.

The long-term financial assistance to infrastructure projects by India Infrastructure Finance Company is to go up to 20,000 crore by March 2011 from the Rs 9,000 crore in the current year.

The Shipping Sector gets around Rs 6,500 crore, Civil Aviation, about Rs 9.500 crore and rural roads about 12,000 crore in the budget. These amounts are substantial step up from the current year.

According to Economic Survey, various state governments have already taken up 450 projects under the public-private partnership model involving total investment of Rs 2.24 lakh crore

The metro rail projects being implemented in Delhi, Mumbai, Kolkata, Chennai and Bangalore at the moment involves an investment of over Rs 70,000 crore.

The modernisation and upgradation of airports in major cities involve huge investments, most of them have already been completed or are in advance stage of completion.

The allocation to power sector has been doubled to Rs 5,130 crore which is considered a significant development considering the fact there is substantial short-fall in the

target for setting up new power generation capacity.

Economists have welcomed the infrastructure spending in the budget saying this would help in pushing up growth and higher spending in rural infrastructure would lead to more job creation.

Infrastructure investments made by insurance companies have been steadily increasing and by the end of 2007-08 it stood at nearly Rs 94.000 crore. The share of public sector companies was over 94%. Infrastructure industries have started tapping private placements as well for mobilising resources. Private placement could be through equity as well as debt. Funds raised only through debt for infrastructure has gone up from a mere Rs 3,800 crore in 2007-08 to Rs 19,000 crore in 2008-09. In April-December 2009, as much as Rs 12,200 crore has been raised.

Equity financing too was going up and all these point to the fact that Government was committed to ensuring that growth is not impeded for want of infrastructure.

Power sector is one area where power generation capacity addition was below target in the first two years of eleventh five year which began in April 2007. But it has started picking up and the Finance Minister, Shri Pranab Mukherjee is confident that revised new power generation target of 62,000 mw in eleventh plan ending March 31, 2012 will be achieved.

Apart from stepping up allocation of power sector in the budget, the Minister has proposed to introduce competitive bidding process for coal blocks for captive mining. Nearly three-fourth of power generation in the country is coal based and this move will ensure greater transparency and increased participation in production for these blocks. He has proposed to take steps to set up a Coal Regulatory Authority to create level playing field in the coal sector. This would facilitate resolution of issues like economic pricing of coal and benchmarking of standards of performance.

Development of solar energy too has got a boost in the budget as plan outlay for the sector has been stepped up by 61 per cent to Rs 1000 crore in 2010-11 from Rs 650 crore in 2009-10. An additional Rs 500 crore is to be spent in Ladakh region of Jammu and Kashmir for setting up solar, small hydro and micro power projects.

Flow of Foreign Direct Investment in the infrastructure sector has been steadily increasing. It was Rs 5,400 crore in 2008-09. Up to November this fiscal, FDI flow has been around Rs 4,500 crore. In 2010-11, it is expected to be much more. Most of the FDI flow in infrastructure has been in power and telecommunication sectors.

Overall the budget augurs well for the Infrastructure which has been given necessary push to ensure the growth momentum is sustained in the coming year. This is good economics at a time when the economy is on path to recovery as it would ensure there is no constraint to capacity addition when demand picks up gradually.

**K.R. Sudhaman **Economic Affairs Editor, Ticker Plant News infrastructure_09_01a

Disclaimer : The views expressed by the author in this feature are entirely his own and do not necessarily reflect the views of INVC



Users Comment

Maryln, says on May 14, 2011, 10:57 AM

Good to know - Thanks for the info!

Arnulfo Swietoniowski, says on April 5, 2011, 7:30 AM

Real glorious info will be found on website here.

zero friction marketing, says on March 9, 2011, 12:33 AM

Many thanks for your time and effort to have decided to put these things together on this website. Janet and i also very much liked your suggestions through the articles over certain things. I recognize that you have several demands with your timetable so the fact that an individual like you took all the time as you did to help people just like us via this article is also highly liked.

gun classifieds, says on February 24, 2011, 8:43 AM

Good read … headline catchy … good points, some of which I have learned along the way as well (humility, grace, layoff the controversial stuff). Will share with my colleagues at work as we begin blogging from a corporate perspective. Thanks!

just host reviews, says on January 11, 2011, 5:03 AM

You are a very smart person! :)

bluehost review, says on January 10, 2011, 7:02 AM

Haven’t recognized there's contest submitting site earlier than!

club penguin forum, says on December 22, 2010, 6:31 AM

quite valuable stuff, on the whole I picture this is worthy of a bookmark, thank you

Odyssey Cases FZGAMPHEAD2X2W, says on December 21, 2010, 8:34 PM

This is often a excellent web site, would you be interested in working on an interview regarding just how you produced it? If so e-mail me and my friends!

Dion Chesson, says on November 14, 2010, 2:33 AM

I was thinking this informative article would be uninteresting as a result of subject matter! But the more browse the better this became.

Keli Coda, says on October 27, 2010, 3:56 AM

The knockoff copies of should have similar functionality.

George Bastow, says on October 26, 2010, 1:37 AM

After reading a few of your posts I actually found this one to generally be really good. I've a blog site as well and would wish to repost some snips of your content in my personal weblog. Should it be ok if I use this as long I personal reference your blog post or generate a back link to your article I took the snip from? If not I understand and would never do it without your approval . I have book marked this valuable post to twitter and myspace account intended for reference. Anyway many thanks either way!

Nubia Bucknell, says on October 25, 2010, 2:39 PM

How can jocks bump into A-1 directories?

Bank online with Chase, says on October 18, 2010, 1:27 PM

So not really on the same topic as your post, but I found this today and I just can't resist sharing. Mrs. Agathe’s dishwasher quit working so she called a repairman. Since she had to go to work the next day, she told him, “I’ll leave the key under the mat. Fix the dishwasher, leave the bill on the counter, and I’ll mail you the check. Oh, and by the way…don’t worry about my Doberman. He won’t bother you. But, whatever you do, do NOT under ANY circumstances talk to my parrot!” When the repairman arrived at Mrs. Agathe’s apartment the next day, he discovered the biggest and meanest looking Doberman he had ever seen. But just as she had said, the dog simply laid there on the carpet, watching the repairman go about his business. However, the whole time the parrot drove him nuts with his incessant cursing, yelling and name-calling. Finally the repairman couldn’t contain himself any longer and yelled, “Shut up, you stupid ugly bird!” To which the parrot replied, “Get him, Spike!”

Stefan Bui, says on October 12, 2010, 9:35 AM

Ok, I consent with the largest part of what's getting said right here, I am relieved I discovered this. :) I was a short time ago having a discussion regarding issue with my smart co workers at work.

proactol, says on September 23, 2010, 7:26 AM

Thank you for your help!Thank you and My best regards! Thank you and Sorry for so many questions but i really need your help.

Dennis Gaser, says on September 21, 2010, 10:55 AM

Do you have a spam problem on this blog; I also use Blog Engine, and I was wondering about your situation; we have developed some excellent practices and we would like to exchange thoughts with others, please Email me if interested.

proactol discount code, says on September 18, 2010, 12:46 PM

When you search on the World Wide Web for appetite suppressants, such as Hoodia gordonii, you will find millions of results. Additional, Unique Hoodia customer reviews elucidate the thrill from the users, because they often cut the food by 50 from what they intake now.

Daniell Reutzel, says on September 17, 2010, 9:58 AM

Not only this, there are no side effects as well. Any weight loss plan has to fit in with your lifestyle and fasting can fit into any lifestyle.

noni, says on August 29, 2010, 11:24 PM

You certainly have some agreeable opinions and views. Your blog provides a fresh look at the subject.

strona startowa, says on August 29, 2010, 8:46 PM

Very Interesting Post! Thank You For Thi Information!

Doradztwo finansowe, says on August 13, 2010, 12:59 PM

Thank you ever so for you blog.Really looking forward to read more. Will read on…

gry online, says on August 10, 2010, 3:17 AM

Awesome Blog. I add this Blog to my bookmarks.

SEO Host review, says on August 3, 2010, 2:13 PM

There is obviously a lot to know about this. I think you made some good points in Features also.

scuba diving, says on August 2, 2010, 4:17 AM

Thank You For This Post, was added to my bookmarks.

tahitian noni, says on July 30, 2010, 1:44 PM

Great Post. I add this Blog to my bookmarks.

Flirting Tips For Girls, says on July 8, 2010, 9:53 PM

Distance lends enchantment to the view

uggs, says on July 6, 2010, 8:37 AM

Good, your blog very useful for me, i will book mark it, thanks!

take online surveys, says on July 5, 2010, 8:44 AM

This is absolutely perfect! Thankyou for putting this out there!!!

ugg boots, says on July 3, 2010, 4:27 PM

Although the article writes good, but has not spoken of the key point, and it also good article.

poker stars bonus codes, says on June 21, 2010, 12:26 PM

Everything you said is true, but there are many upsides. Like, you can’t be fired.

Valentine Angello, says on June 18, 2010, 11:18 PM

Ya know, this is going to be pretty interesting. Seeing how this blog grows from 50 uniques a day to x,xxx+ (hopefully :D ).

Mickey Timonere, says on June 8, 2010, 1:24 AM

that's incredible.

Wakacje, says on June 2, 2010, 10:29 PM

Very Interesting Post! Thank You For Thi Blog!

Canon wide angle lenses, says on June 1, 2010, 12:15 AM

I’ve been visiting your blog for a while now and I always find a gem in your new posts. Thanks for sharing.

Alan Harris, says on May 28, 2010, 11:12 AM

Hi i am new on here, I found this board quite useful & its helped me loads. i will be able to give something back & help other people like its helped me.

mexican copper sinks, says on May 26, 2010, 3:26 AM

A good horse cannot be of a bad color.

Viviana, says on May 17, 2010, 8:57 AM

Really Good Work…. You Helping People A lot

Watch Spartacus Episodes, says on May 17, 2010, 2:14 AM

Lets see if I can reply to this on this with my new itouch...

Lauryn, says on May 12, 2010, 6:16 AM

Hey - Nice blog, just looking around some blogs, seems a pretty nice platform you are using. I'm currently using Wordpress for a few of my sites but looking to change one of them over to a platform similar to yours as a trial run. Anything in particular you would recommend about it?

surf camps, says on May 9, 2010, 2:27 AM

Have you thought of adding more videos to your blog posts to keep the visitors entertained? I recently read through the entire article and it was good…thanks for sharing

crystal quest water filter, says on May 9, 2010, 12:16 AM

Fresh fish and newcome guests smell when they are three days old.

Caitlin, says on May 8, 2010, 6:14 AM

Most helpful site and information

Johanna, says on May 5, 2010, 4:58 PM

You got fantastic nice ideas there. I made a research on the topic and got most peoples will agree with your blog.

Annie, says on May 2, 2010, 1:06 PM

I liked it. So much useful material. I read with great interest.

holiday motels, says on April 20, 2010, 5:35 AM

Do you have problems with spammers? I also use Blog Engine and I have some nice anti-spam techniques; please Email me if you are interested in an exchange of practices.

Mark, says on April 9, 2010, 8:35 AM

Aw, this was a really quality post. In theory I'd like to write like this too - taking time and real effort to make a good article... but what can I say... I procrastinate alot and never seem to get something done.

Alissa, says on April 6, 2010, 2:06 PM

You have some honest ideas here. I done a research on the issue and discovered most peoples will agree with your blog.