Budget 2018-19 To Boost India’s Infrastructure & Rural Sector
A major focus in the Budget will be spending on infrastructure and the rural sector. The Government wants to maintain the momentum at which new infrastructure is being developed in the country. Focus on developing rural and urban infrastructure will be welcome, given the current economic scenario.
The past year has been a relatively tough year for the cement industry, with growth coming in at a muted low single digit. The most obvious cause of this is the slowdown in the housing sector, which consumes about 65 per cent of India’s total cement consumption. Financial year 2017-2018 was also the year of challenges — the ban on sand mining and the use of pet coke.
In the year 2018-2019, demand for cement is expected to grow by six per cent to seven per cent to reach 307 million tonnes. This is likely to be driven by a slew of infrastructural projects that have been announced by the Union Government. Chief among these are the Bharatmala project that seeks to develop 84,000 kilometers of roads by 2022, the Smart Cities project and the Housing for All program by 2022. The number of infrastructure projects planned by the Government are now in a phase where we expect work to progress in right earnest.
While challenges abound, historically, the Indian cement industry has remained prepared for eventualities. This time around, the industry has answered the Government’s call for infrastructure push by increasing production capacity. With a view to have inclusive growth for all sectors, emphasis will be to create demand for the real estate sector, with a focus on affordable housing, Government-led higher infrastructure spending in the form of higher fund allocation and incentive for public private partnership (PPP) to keep robust demand for cement.
Post the Goods and Services Tax, the industry too is exploring avenues for optimisation in logistics cost by direct supplies, creating hubs to serve distant markets at lower costs.
The new Budget should put impetus on developing rural infrastructure. Under the Bharatmala project, the biggest ever highway development plan has already been approved by the Government. We expect urban infrastructure, housing, water and sanitation needs to be discussed at the new Budget announcement. To what extent will Budget 2018-2019 reflect these concerns is an overwhelming question.
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