BENGALURU: With the de-legalisation of high-denomination currency crippling growth, the infrastructure sector would need a fresh round of fiscal stimulus to put growth back on track. And, this will be a major focus of the finance minister in the upcoming Budget, says Devendra Kumar Pant, chief economist and senior director at India Ratings and Research.
He says that in the backdrop of lower growth due to note ban, the Budget will have to focus on growth-enhancing policies with steps towards implementation of the goods and services tax. The Budget needs to give some guidance on how investments can be attracted for the development of roads, ports, railways and aviation sectors.
There has to be a clear boost and improvement in capital inflows for which the dictum of ‘ease of doing business’ needs to be revisited seriously.
According to Vishwas Udgirkar, senior director, Deloitte India, the Railways needs government support to buttress safety measures and to finance long-term projects.
“A number of accidents happened in the past year and I hope the FM will bring about some measures to allocate money for the safety of the railway passenger. He will have to come up with some innovative ways to cater to the railways financial needs especially in those long-term ambitious projects like freight corridors. This year, it will be interesting to see whether the FM will touch upon various aspects of the railways or just talk about a broad allocation of funds.”
He adds that the government has to make roads for the overall economic development but roads by themselves don’t earn the revenue. In ports and railways there is return on investment as they are more commercially focused. “Roads and highways will need much more governmental support whereas ports and railways will need money to meet the gaps. However, they also need to increase their efficiency so that direct support from the government goes down. Railways will have to think about newer ways of garnering revenue like advertisement and commercialisation of e-portals.”
Udgirkar notes that railways’ reliance on gross budgetary support from the government will increase this time. “The current level of cross-subsidisation of passenger fares needs to be reduced. The merger of the railway budget with the main Budget will create more capacity for the sector.”