Infrastructure is one of the largest sectors in the Indian economy and the fillip that is provided by the union budget 2020 was much expected, but was it too little compared to the hopes?
Budget 2020 fell short of expectations from the allocation itself. For the transport sector, the Modi government announced an allocation of Rs 1.7 lakh crore and that compares to Rs 1.56 lakh crore done last year, which is a growth of just 9 percent. The expectation was double-digit growth in terms of allocation.
Even for the power sector, the allocation has remained flat year-on-year (YoY) and for Indian Railways, the growth is just 3 percent. The government has proposed Rs 5,753 crore outlay for new and renewable energy ministry for 2020-21 as against Rs 3,891.74 crore revised estimate for 2019-20. The budget estimate was Rs 5,254.83 crore.
In the policy framework, there are no major reforms announced. For the power sector, there was no reform for the discoms and there was no development financial institution which has been a long ask from the sector.
However, on the positive side, the government did announce to provide 100 percent exemption when it comes to the investment of sovereign wealth fund into the infrastructure sector and that could bring in sizeable inflows to the infrastructure sector.
For the power sector as well, the government has announced a concessional rate of 15 percent which will be allowed to new power generating companies in order to attract investment.