“Infrastructure is the buzzword now that Finance Minister Nirmala Sitharaman has used Budget 2021-22 to heave the national economy out of the current crisis with a massive infusion of funds into infrastructure development”,
writes K. C. Suresh Kumar
F or a nation that has been reeling under the impact of total and rolling shutdowns consequent upon the Covid-19 outbreak, the Budget 2021-21, presented in Parlament on February 1 by Finance Minister NIramala Sithamaran, marks a welcome relief. The Finance Minister has chosen to lay emphasis on infrastructure development with huge capital infusion, which augurs well for the economy not just during 2021-22, but also in the years to come. From ₹4.39 lakh crore in 2020-21, the allocation for capital expenditure during the coming fiscal has been raised to ₹5.54 lakh crore. This is nothing short of a quantum leap and should see accelerated spending on physical infrastructure, healthcare, job generation, and rural development. Any investment in infrastructure is bound to have
long-term multiplier effect as it triggers economic activities, resulting in job generation and more money in the pockets of the people. While raising the allocation for capital expenditure, the Finance Minister has taken the deliberate decision not to be constrained by the fear of breaching the fiscal deficit cap that the government had set for itself. The promise now is to limit the fiscal deficit to 4.5% of the GDP by 2025-26
The outlay for road and highway infrastructure development is a record ₹1.18 lakh crore, which marks an almost 18% increase over the Budget estimates for 2020-21. The Ministry of Road Transport and Highways (MoRTH) has been working overtime to cover unprecedented distances in road transport and highway development, the current target being construction of 11,000-km of National Highways during the current fiscal. Together,
Tamil Nadu, Kerala, West Bengal and Assam would get ₹2.27 lakh crore for highway development projects.
Highway riding would become safer with the construction of four and six-lane highways with advanced traffic management systems, speed radars, variable message signboards, and GPS enabled recovery vans. The National Highway Authority of India (NHAI) would be permitted to go for market borrowing to the tune of ₹65,000
crore. As much as 8,500 km of road projects will be awarded in 2021-22.
The National Infrastructure Pipeline, launched with 6,835 projects in 2019, has now been expanded to 7,400 projects. It will result in incremental aggregate demand in the economy, create more jobs, and make industries more cost-efficient by reducing the cost of logistics and transportation.
Boost for affordable housing The Finance Minister’s decision to give a big push for affordable housing has resulted in tax breaks for those availing loans for purchasing affordable housing units. Thus, as much as ₹1.5 lakh would be deducted under section 80EEA from the taxable income of a person who takes a loan for the purchase of affordable housing unit. This benefit is over and above the ₹2 lakh deduction against interest paid on a home loan taken to buy a house under Section 24 of I-T Act and takes the overall deduction on interest paid on home loans to ₹3.5 lakh.
REITs & InvITs
The Finance Minister has also announced that Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) would be allowed to raise more debt capital, which would provide them with additional funds to acquire assets. Similarly, rental housing has received a thumbs up with offer of tax deduction for those undertaking rental housing projects.
Big railway development plans: Railways and Metro Rail Projects across the country has much to feel happy with the Budget 2021-22 as the Finance Minister has gone in for a massive increase in the outlay for the Indian Railways. The Railways has got a record outlay of ₹1,10,055 crore, of which ₹1,07,100 crore is for capital expenditure.
According to the Railway Ministry, the thrust of Annual Plan 2021-22 is on development of railway infrastructure, throughput enhancement, augmentation of speed of trains,
signaling systems, development of terminal facilities, improvement of passengers’ facilities and amenities, safety works of road over bridges, road under bridges, etc.
• The plan heads allotted highest ever outlays in BE 2021- 22 are:
• The plan head for New Lines was Rs 26,971 crore in Budget Estimates (BE) 2020-21. It has been raised to ₹40,932 crore in BE 2021-22, registering an increase of 52%.
• The plan head for Doubling was ₹21,545 crore in BE 2020-21. It is ₹26,116 crore in BE 2021-22, with an increase of 21%
• The plan head for Traffic Facilities was ₹2,058 crore in BE 2020-21. It is ₹5,263 crore in BE 2021-22, marking an increase of 156%
• The plan head for ROB/RUBs was ₹6,204 crore in BE 2020-21. It is ₹7,122 crore in BE 2021-22, registering an increase of 15%.
• According to the Railway Ministry, national projects of Jammu and Kashmir, as well as the states of Uttarakhand, Himachal Pradesh and North Eastern region have been allocated the highest ever outlay of ₹12,985 crore in BE 2021-22 against the RE 2020-21 of ₹7,535 crore i.e. increase of 72%t. Besides, ₹37,270 crore of GBS has been allocated for investment in PSU/JV/SPVs, with allocation for the Dedicated Freight Corridor Corporation of India (DFCCIL) of ₹16,086 crore, National High Speed Rail Corporation Limited (NHSRCL) of an amount of ₹14,000 crore as well as Kolkata Metro Rail Corporation Limited
(KMRCL) of ₹900 crore.
• The national rail plan of Indian Railways has been set up with a core focus to lower the logistics cost and improve Make in India program. Use of indigenous signaling technology, focus on increasing safety, are some of the other announcements in the Budget. The Budget also announced funds for Kochi Metro Third Phase (₹1,527 crore), Chennai Metro (₹63,246 crore), Bengaluru Metro, Nagpur Metro and Nasik Metro.
Ms. Sitharaman has said that the government would increase spending on rural infrastructure development by 34% to ₹40,000 crore and doubled micro-irrigation corpus
to ₹10,000 crore so as to create jobs and boost farm incomes in the hinterland – home to more than 800 million people, whose purchasing behaviour is largely linked to farm output.
The Finance Minister has said that a Jal Jeevan Mission Urban with an outlay of ₹2.87 lakh crore would be implemented over 5 years with the objective of ensuring universal water supply in all 4,378 urban local bodies, with 2.86 crore household tap connections and liquid waste management in 500 AMRUT cities.
She has also announced Urban Swachh Bharat Mission 2.0 with an outlay of ₹1,41,678 crore, to be implemented over 5 years from 2021, focused on complete fecal sludge management, wastewater treatment, source segregation,
management of waste from urban construction, and bio-remediation of legacy dump sites.
Power & Renewable Energy
The Budget announced a financial assistance package of
about ₹3.06 lakh crore for India’s ailing electricity distribution companies (discoms). The funds will be allotted based on a results-based approach tied to the discoms’ financial
performance. The funds would be spent on infrastructure investment such as installation of prepaid and smart meters, and feeder separation. Currently, all discoms in the country, whether private or state-owned, are monopolies. A framework will be put in place to give choice to the customer in the form of at least two discoms in every market. Transmission assets of the Power Grid Corporation of India will be rolled out under the asset monetization program. Focusing on new energy sources, the Finance Minister has
announced a National Hydrogen Mission. Aimed at scaling up generation of hydrogen from green sources, the Solar Energy Corporation of India (SECI) and Indian Renewable
Energy Development Agency (IREDA) will get an additional capital infusion of ₹1,000 crore and ₹1,500 crore, respectively.