Ahead of the budget there was a very high expectation from the government to boost Infrastructure Sector, even in the speeches of PM Narendra Modi we were hearing about boosting Infrastructure Sector. The Issues that this sector is facing Pre-budget was Project order inflows due to slow down in industrial activity, Delays in project execution due to delays in land acquisition and environmental clearances, High interest costs and overcapacity.
The measures taken by government in the budget are Well-Defined. The actions taken by government are as follows:-
- Allocated Rs 37,800 Cr to NHAI for roads and Rs 14000 Cr for rural roads, plan to award 8500 KM road projects this year.
- Government allocated Rs 7060 Cr for 100 Smart Cities.
- 16 new projects to be awarded this Year.
- SEZ to be revived.
- Airports I tier I and tier II cities to be developed via PPP Model
- Setting up Infrastructure Investment Trust for attracting long-term funds
- Reduction in customs and excise taxes to boost
- Single-window customs clearances at Indian ports.
We believe that these steps will help to boost Infrastructure spending as new orders will flow in. New and better roads will boost logistics industry. There will be spurt in demand for capital goods and heavy engineering. So we are positive on Cement sector as starts of industrial and real estate projects. We are also positive on Infrastructure stock as well as Capital Goods Stocks.