Yes Bank’s Rana Kapoor feels budget 2016 drives economic growth through infrastructural development

Against the backdrop of India’s promising growth story, compared to a flat global landscape, the Budget 2016-17 underscores the Government’s commitment to provide further impetus by way of a clear action plan for sustainable growth of India’s infrastructure – the single largest investment opportunity in the world.

In order to address a pressing backlog of infrastructure needs amid weak private sector appetite and global headwinds, the government takes the baton in its hand. Critically, sectors such as roads, shipping, power, renewable energy, ports have seen marked increases in allocations.

Additionally, in a bid to encourage private sector participation, provisions for renegotiation of PPP contracts have been spelt out and a Public Utility Resolution of Disputes Bill is also sought to be passed to solve problems in infrastructure contracts, PPP and public utilities.

By continuing to maintain the delicate balance between the priorities for India and Bharat, Budget has created growth impulses for infrastructure sector and farmers alike. India’s extensive infrastructure needs are well known. Decades of underinvestment have created deficits in critical areas such roads, highways and railways. A combined budgetary allocation of Rs2.8 lakh crores for Roads and Railways will have an extremely positive impact on ensuring sustainable development of India’s infrastructure and encourage private participation.

In particular, along with Pradhan Mantri Gram Sadak Yojana, the Road Sector continues to be a focus sector, with a dedicated budget allocation of Rs97,000 crores for development of roads and highways. 85% of projects are now back on track. Increase of more than 30% over planned expenditure, with a target to build 10,000 km of National Highways, has created positive sentiments. In addition, upgradation of 50,000 km of State Highways to National Highways will ensure development of roads in line with NHDP program.

Sensing the financing needs of NHAI, the FM has also announced issuance of Rs. 15,000 Crores worth of tax free bonds. The ambitious yet achievable target of building 30 km of road per day will be instrumental in bridging the developmental gap since 2012-14 during which only 5,100 Km of road projects were awarded.

Further, abolition of permit-raj and amendments in the Motor vehicles Act to bring in the Private Sector will not only help in more efficient public transport facilities but also drive job creation, entrepreneurship and start ups in the sector as well as push the 55 State Transport Undertakings (STUs) to achieve operational excellence.

The step up in budgetary support, coupled with a clearly laid out road map for all round development, supported by programs such as setting up of NHDP, Bharatmala Pariyojna, Special Accelerated Road Development Program in the North East, will send positive signals to investor and lenders who have been cautious in their approach to the infrastructure sector.

Infrastructure: The game changer

Quality physical infrastructure is vital for business generation and youth employment in an emerging economy such as ours and provides deep impetus to establish industries and nurture the entrepreneurial zeal of a high growth economy.

However, multiplicity of departments – roads and highways, railway, waterways and aviation, creates a systemic imbalance, hampering growth and implementation. I strongly believe that establishing a Unified Infrastructure Regulatory Authority with a clear mandate to formulate and implement development strategies in sync with dynamic economic environment is crucial to improve logistics and ensure balanced, long-term development, build consensus with all stakeholder and ensure effective Center-State relationship.