With the Union Budget being around the corner, as part of CNBC-TV18’s special segment 'Budget Countdown', we decode what the infrastructure sector is expecting from Finance Minister Nirmala Sitharaman this time around.
To get further insight, CNBC-TV18 spoke to Vinayak Chatterjee, Infra Expert and Chairman of CII's National Council on Infra, and Renu Baid, Vice President - Research at IIFL Institutional Equities.
First up, Chatterjee mentioned that he is expecting a 25 percent outlay for infrastructure in the upcoming Budget. Delving deeper, he said that he expects the infra outlay to touch Rs 7 lakh crore.
He said, "The biggest expectation from the Budget for the infra sector is that with continued emphasis, infrastructure and public works is going to be the prime mover of the economy and of GDP growth; we are expecting a 25 percent increase in outlay."
Chatterjee added, "This should come on the back of a 26 percent increase last year and the outlay back then was Rs 5.54 lakh crores. So, with a 25 percent increase expectation, we are expecting the sigma of all sectoral outlays in infrastructure to touch the Rs 7 lakh crore level, that's the big expectation."
He is of the view that the focus must now shift to implementation of new projects. Additionally, on the GST (goods and service tax) front, Chatterjee is expecting announcements on cement as well as clarification on batteries used in electric vehicles (EVs) in the Budget.
He added, "We are expecting some comment on bringing down or taking to the GST Council, these issues of cement GST, as well as the GST on batteries for electric vehicles."
Meanwhile Baid believes metro, rail and water will remain the core sectors among the infra space that will be highlighted in the Budget. He feels power T&D, which has been lacklustre, could see a comeback this time around.
“Government had made announcements with respect to reforms on the distribution side so power T&D, which has been quite lacklustre for the last three years, should hopefully come back with an increase in allocations," he explained.
According to Baid, L&T will be the biggest beneficiary as it is the most diversified in this space. Additionally, he sees Hitachi Energy at the forefront too along with Siemens.
He said, "From a company perspective, I see Larsen & Toubro being the biggest beneficiary because of the diversified exposure that they have across all the segments of infra be it rail, metro rail, urban infra, water, so I think that is one name which would be clearly benefit."
"When we look at the segment-wise exposure, we see metro and suburban trains being a big beneficiary as a category. So here, we see companies like Hitachi Energy being at the forefront; hopefully this time around allocations for rolling stock signal in telecom should see an uptick. So Siemens and the wagon companies like Titagarh Wagons, Texmaco should see some traction and activities,” Baid said.
Watch the video for the full interview.