Infra industry gets a Boost in Union budget 2010

If there’s one industry, which received adequate emphasis in Budget 2010, it’s the infrastructure sector. The government has increased the allocation to 46 per cent of the total outlay to Rs 1.73 lakh crore. Besides, the finance minister also announced building of 20 km of national highways per day, apart from increasing the allocation for road construction by 13 per cent.

“The increase in allocation of 13 per cent to Rs 19,894 crore on development of roads augurs well for the sector,” said T V Sandeep Reddy, Managing Director, Gayatri Projects Ltd. He added that the initiative to develop 20 km of roads per day will provide fillip to the industry.

The increased thrust on the rural and urban infrastructure will benefit all sections of the society. It is a good move to authorise IIFCL to refinance infrastructure projects. “The increase in allocation of 46 per cent of the total Plan outlay to the infrastructure industry is encouraging. Infrastructure is extremely crucial as the world is looking at India and this announcement could not have come at a more opportune time,” said Atul Punj, Chairman, Punj Lloyd Group.

The IIFCL disbursements are likely to touch Rs 20,000 crore next financial year from this fiscal’s Rs 9,000 crore.

This apart, the additional allowance of Rs 20,000 in standard deduction in specified infrastructure bonds is considered positive.

“The thrust on infrastructure development especially to roads and the power sector is a welcome move, while the reduction in surcharge on corporate tax is a marginal benefit,” said Dr G V K Reddy, Chairman, GVK Power & Infrastructure Ltd.

He added that the infrastructure sectors will indirectly benefit from the additional Rs 20,000 relief provided to individuals subscribing to infrastructure bonds.

“The emphasis on developing social infrastructure is a positive sign besides the idea of expanding social security net and the urgent need to address the skillgap will augur well for the economy,” said Hemant Kanoria, CMD, Srei Infrastructure Finance Ltd. However, the increase in MAT from 15-18 per cent is likely to act as a deterrent.

“We were expecting re-instatement of the benefits under Section 10-23 (G) of Income Tax Act, which didn’t happen,” he added.