The budget 2017-18 has given the much-needed push to country’s infrastructure sector. The government has announced to invest Rs. 3.96 lakh crore in creating and upgrading the infrastructure of the Asia third largest economy in the next financial year. In the last budget, the government had allocated the investment of Rs 2.21 trillion for 2016-17.
The government has allocated 18 percent (Rs.3.96 lakh crore) of the total budget allocation, to build and modernize roads, railways, shipping, airports and others. The total expenditure in Budget for 2017-18 stands at Rs. 21.47 lakh crore. The government has made record spending to improve strained infrastructure of the world’s second most populous country.
For the development of the road sector, the government has allocated Rs. 64,900 crore for Highways in next financial year, up from Rs. 57,976 crore in 2016-17. Further, the government has identified the construction and development of 2,000 km of coastal roads to facilitate better connectivity with ports and remote villages.
The government has set a target to build 42 km of roads per day.
For the modernization and up-gradation of railways, Railway lines of 3,500 km will be commissioned in the next fiscal, as against 2,800 km in 2016-17. The government also announced to redevelop at least 25 stations. The total capital and development expenditure on Railways has been pegged at Rs. 1.31 lakh crore for the next financial year.
The allocation for shipping sector has gone up to Rs 1773 crore from Rs 1531 crore in the last budget. The government has allocated Rs 600 crore for Sagarmala programme.
The transportation sector alone has been allocated Rs. 2.41 lakh crore, including Rail, Roads, and Shipping in 2017-18. The Finance Minister said, “This magnitude of investment will spur a huge amount of economic activity across the country and create more job opportunities.”
While speaking on upgradation of Civil Aviation infrastructure, Mr. Jaitley said that the Select airports in Tier 2 cities of the country will be taken up for operation and maintenance in the PPP (Public – Private Partnership) mode.
In the budget, Finance Minister Mr. Arun Jaitley has taken various measures to boost the construction sector of the country. He has given much-needed relief to affordable housing, now the government has decided to grant infrastructure status to affordable housing, the move is expected to attract investors and reduce costs for developers.
Further, the government announced to build one crore houses for houseless and those living in ‘Kutcha’ houses by 2019. For the financial year 2017-18, the allocation for Pradhan Mantri Awaas Yojana (PMAY)-Rural has been increased to Rs 23,000 crore from Rs.15,000 crore in 2016-17, it will give a boost to construction activities in rural India.
The Indian government planned to lay down the Optical Fiber Cables spread over 1,55,000 km and connect more than 1,50,000 gram panchayats with high-speed broadband connectivity by the end of 2017-18.
Commenting on Budget, Mr. Vipin Sondhi, Managing Director & CEO, JCB India Ltd. said, “From earthmoving and construction equipment industry’s perspective, we till now witnessed that the roads and highway sector leading the growth momentum, however to really create sustainable growth, other sectors needed attention. With this budget the focus has broadened and now includes sectors like railways, agriculture and real estate with emphasis on affordable housing. A record investment of Rs. 3,96,135 crore for infrastructure, 1.31 lakh crore for railways is a big boost to the economy and a step in the right direction.”
The government commitment towards the expansion of country’s infrastructure development helped the construction equipment industry in 2016. Last year, the sales of the construction equipment and construction vehicles drove on the back of government investment in various infrastructure projects.
The huge Rs. 3.96 trillion allocations for infrastructure sector is the good news for the construction equipment and heavy machinery manufacturers like JCB, Volvo CE, Tata Hitachi, Komatsu, SANY, Caterpillar, and others. Also, Heavy commercial vehicle (Dumper & Tipper) makers like Tata Motors, MAN Trucks, SSAB, Ashok Leyland, and others will also get benefited from this budget.
The investment would drive the sales of various construction equipment and material handling products like Backhoe Loaders, Excavators, Cranes, Motor Graders, Bulldozers, Skid steer loader, compactor, Paver, Pavement Planer and others. As the projects hit the ground, the used construction equipment will also witness the demand.
Source: Information has been obtained from Ministry of Finance