“The budget laid out three themes: seeking better standards of living, accelerating the pace of universal economic development and the creation of a caring and compassionate society, ” according to Arun Kumar, Chairman & CEO, KPMG in India.
“The budget reiterated the government’s focus on upgrading and modernizing India’s stock of physical and digital infrastructure. Alongside, the budget aims to increase farmers’ and fisherfolks’ income by improving access to rural markets and measures to strengthen the ‘blue economy,” he said.
Mr Kumar said the budget has recognized the seminal role of logistics infrastructure in promoting investments, in reducing process -friction and inducing growth, by announcing the imminent formulation of a National Logistics Policy. Improved logistics is critical to reduce the cost of doing business, both domestically and for export competitiveness.
In addition to providing INR 1.7 trillion for the transport sector and INR 220 billion for the renewable energy sector, there is a focus on mobilizing private capital. Private fund flows are sought to be increased through several measures: tax exemptions to sovereign wealth funds investing in infrastructure; lower tax rate for power generation companies; plans for further asset recycling; the corporatization and listing of ports; and the promotion of a NIIF sponsored NBFC, he said.
Mr Kumar said the creation of a Project Preparation Facility should help enhance the quality of project reports through the engagement of young trained professionals. This proposal should help address a key constraint in infrastructure development – the capability to develop financeable project plans.
He said the continued focus on infrastructure is critical in the short term for job creation, and in the longer term to enhance the competitiveness of the economy. The opportunity and the challenge are to ensure that these outlays are deployed expeditiously, and projects prioritized and executed effectively.
Going beyond the current budget proposals, the infrastructure sector will be further benefited by the creation of a long -term development financial institution for infrastructure financing, the revitalization of the PPP architecture, and the implementation of a time bound dispute resolution framework, Mr Kumar added.