The Spend on roads & highways, railways (20% increase at Rs1,210 bn), power T&D, renewable (65% increase in NRE to Rs102bn), urban infra - metro projects (19% increase at Rs100bn) & smart cities (20% higher at Rs72bn) and water continue. For Power T&D , there is Capex for rural electrification, feeder separation & T&D infra upgrade increased by 50% under DDUGJY (Rs30bn) & IPDS (Rs30 bn).
Renewables will see spend under NRE increased by 65% to cRs100bn. Limited accelerated depreciation benefits to 40% may slow the pace of capacity additions in renewable projects (solar & wind) by retail and SME players. For Water, there is a fast track 89 projects under AIBP (accelerated irrigation benefit program), spend Rs170 bn in FY17 and cRs865bn over five years; create a long term irrigation fund in NABARD with initial corpus of Rs200bn; Rs60bn projects to be implemented through multilateral funding for ground water resource management; Rs22.5bn allocated for Namami Ganga.
For Healthcare three is a proposal to set up NDSP (National Dialysis Services program) under PPP mode. Customs & excise duty exemption on certain equipments will be positive for Siemens. Clean Environment (energy) cess increased 2x to help fund renewable projects & new emission norms for thermal power plants (positive - BHEL, Alstom India). Steps identified to revive stalled PPP projects (Provide legal framework for dispute resolution and re-negotiations in PPP projects and public utility contracts). Increase in customs duty on capital goods from 7.5% to 10% will provide relative support to the domestic manufacturers. Service tax (6.5%) to be levied wef 01-03-2016 on construction & EPC works for metro/monrail projects awarded. No material impact, as will be passed on customers/ developer. Marginally negative for L&T (Hyderabad metro asset). There is a proposal to correct the inverted duty structure for varied capital good items.
Infrastructure - Positive
|Target to award 10,000 km of National Highways in FY17. Also 50,000 km of State Highways to be upgraded as National Highways||Positive for the entire Road sector|
|Total outlay for roads and highways increased to Rs.97,000cr||Will lead to increased investments in road projects. Positive for all companies in the Road sector|
|Re-vitalization of PPP through Public Uility Bill for dispute resolution, development of new Credit Rating System and guidelines for re-negotiation of PPP Agreements||Positive for BOT Players like IRB Infra, Sadbhav Infra, Ashoka Buildcon, PNC Infra|
|Service tax @5.6% to be levied on contracts entered on or after 1st March 2016 for construction of monorail and metro||Negative for ITD, Jkumar Infra, Reliance Infra|
|Redevelopment of unserved and under-served airports; to develop 10 of 25 non-functional airstrips around the country||Positive for companies like GMR Infra|
|Rs.800cr allocated for modernizing ports and increasing their efficiency. The funds to also be used in developing new greenfield ports both in the eastern and western coasts||Positive for companies like Adani Ports, ITD Cementation, Simplex Infra|
|Creation of a dedicated Long Term Irrigation Fund in NABARD with an initial corpus of about Rs.20,000cr.||Positive for companies like Pratibha Industries, Jain Irrigation, ITD Cementation|
|Withdrawal of 80IA benefit under IT Act for development and O&M on or after 1st April, 2017. However investment linked deduction under section 35AD of IT Act to be allowed.||Negative for selected players availing 80IA benefit like KNR Constructions|
|Imposition of countervailing duty on selected machinery used in construction of roads||Negative for road development companies|
|Custom duties exemption on direct imports of specified goods for defence withdrawn||Inline with Government's focus of Make in India. Will benefit companies like BEL, LT, Bharat Forge|
|Custom duties on certain capital goods products increased from 7.5% to 10%||Positive for domestic capital goods companies like Crompton Greaves, BHEL, LT, Thermax|
|Total outlay for Infrastructure sector pegged at Rs.221,246cr for FY17 (FY16: ~Rs.180,000cr)||Positive for the entire Infra sector|
The budget clearly focused on the rural and social infra: Sanjay Nayar, KKR India
Budget has focus on rural, social and infrastructure sectors: Anjani Kumar
FM presented a balanced budget with a focus on infrastructure and agriculture sectors
Budget took some positive steps towards boosting urban infrastructure and housing