Firstpost
  • Home
  • Video Shows
    Vantage Firstpost America Firstpost Africa First Sports
  • World
    US News
  • Explainers
  • News
    India Opinion Cricket Tech Entertainment Sports Health Photostories
  • Asia Cup 2025
Apple Incorporated Modi ji Justin Trudeau Trending

Sections

  • Home
  • Live TV
  • Videos
  • Shows
  • World
  • India
  • Explainers
  • Opinion
  • Sports
  • Cricket
  • Health
  • Tech/Auto
  • Entertainment
  • Web Stories
  • Business
  • Impact Shorts

Shows

  • Vantage
  • Firstpost America
  • Firstpost Africa
  • First Sports
  • Fast and Factual
  • Between The Lines
  • Flashback
  • Live TV

Events

  • Raisina Dialogue
  • Independence Day
  • Champions Trophy
  • Delhi Elections 2025
  • Budget 2025
  • US Elections 2024
  • Firstpost Defence Summit
Trending:
  • Charlie Kirk shot dead
  • Nepal protests
  • Russia-Poland tension
  • Israeli strikes in Qatar
  • Larry Ellison
  • Apple event
  • Sunjay Kapur inheritance row
fp-logo
Union Budget 2021: Govt should introduce framework for fiscal consolidation of infra firms
Whatsapp Facebook Twitter
Whatsapp Facebook Twitter
Apple Incorporated Modi ji Justin Trudeau Trending

Sections

  • Home
  • Live TV
  • Videos
  • Shows
  • World
  • India
  • Explainers
  • Opinion
  • Sports
  • Cricket
  • Health
  • Tech/Auto
  • Entertainment
  • Web Stories
  • Business
  • Impact Shorts

Shows

  • Vantage
  • Firstpost America
  • Firstpost Africa
  • First Sports
  • Fast and Factual
  • Between The Lines
  • Flashback
  • Live TV

Events

  • Raisina Dialogue
  • Independence Day
  • Champions Trophy
  • Delhi Elections 2025
  • Budget 2025
  • US Elections 2024
  • Firstpost Defence Summit
  • Home
  • Business
  • Union Budget 2021: Govt should introduce framework for fiscal consolidation of infra firms

Union Budget 2021: Govt should introduce framework for fiscal consolidation of infra firms

Samir Kanabar • January 29, 2021, 17:41:05 IST
Whatsapp Facebook Twitter

The infrastructure sector has been one of the most impacted due to the pandemic and companies have come under considerable financial stress.

Advertisement
Subscribe Join Us
Add as a preferred source on Google
Prefer
Firstpost
On
Google
Union Budget 2021: Govt should introduce framework for fiscal consolidation of infra firms

The promise of a Budget like ‘never before’ by the finance minister seems to be apt with the daunting task of addressing issues caused by COVID-19 pandemic i.e. subdued investment, consumption and trade. The need is to accelerate growth and augmenting avenues for revenue mobilisation. While fiscal 21-22 will see additional spend on vaccines, agriculture and other schemes, the buoyant GST collections could help balance out the fiscal deficit and allow the government to spend on Infrastructure with the ultimate aim of having a multiplier impact on the economy. Out of the projected investment of Rs 111 lakh crore on infrastructure projects by FY 2024-25 as per National Infrastructure Pipeline (NIP), projects worth Rs 44 lakh crore (approximately 40 percent) are under implementation and worth Rs 22 lakh crore projects (approximately 20 percent) are under development stages. While the government spend on infrastructure has taken a backseat due to the allocation of funds for the pandemic package, a new door has been opened by allowing insurance companies to fund infrastructure projects. Given that insurance companies have seen a rise in premiums during this pandemic, it is likely that sustainable infrastructure projects will attract the funding to replace spending by government. Issuance of long-term infrastructure tax-free bonds by the private sector by providing additional deduction under Section 80C of the Act in hands of taxpayers could also achieve the twin objective of fostering funding requirements as well as providing relief to individual taxpayers. The success of the Development Finance Institution (DFI) has been witnessed earlier with regards to the development of various industries in the country, e.g. IFCI, ICICI, IDBI, etc. Considering that the present times require innovation in the form of various financial instruments /mechanisms to fund infrastructure projects, a dedicated infrastructure DFI seems to be a much-needed shot in the arm for the infrastructure sector. India is set to host the G20 meet in 2022 and accordingly, it would be critical that various projects viz. highways, roads, ports etc. attain smooth closure. Recently, NITI Aayog and Quality Council of India (QCI) launched ‘National Program and Project Management Policy Framework’ (NPMPF) to bring in sweeping reforms in the way execution of infrastructure projects in India. This welcome initiative is expected to pave the way for greater accountability and transparency in the execution of projects. Despite COVID-induced challenges, 8,169 km of national highways were constructed from 1 April 2020 to 15 January 2021 in the current financial year 2020-21, up 8 percent during the same period a year ago. NHAI’s Infrastructure Investment Trust (InVIT), the first InvIT to be sponsored by any government entity in the country, is apparently on the cusp of being launched and is expected to spur the growth agenda for the road infrastructure. The Indian Ports Bill 2020 (at draft stage, open for public consultation which shall replace Indian Ports Act, 1908) seeks to foster structured growth and sustained development of ports. The key would be to provide a robust roadmap for the same keeping in mind various concerns of stakeholders. Given the severe impact of the pandemic on the aviation sector, it would be interesting to see how the government reacts to various asks by stakeholders; e.g. flexibility to operate on remote and loss-making routes, a free hand in ticket pricing, bringing jet fuel under GST, etc. In order to incentivise infrastructure projects, the government should extend lower corporate tax rate of 17.16 percent (presently available to new manufacturing companies including electricity generation companies) to other infrastructure companies. The infrastructure sector has been one of the most impacted due to the pandemic and companies have come under considerable financial stress. A framework for fiscal consolidation for the infrastructure companies could be introduced. This could enable companies with multiple horizontal SPVs to be able to set off the losses incurred in one SPV against the profits earned by other SPVs. The fiscal consolidation would go a long way in easing the pressure of the industry players by lowering their tax costs. In the hybrid annuity model (HAM), in respect of construction cost of road assets by contractor, 40 percent of the payments are paid by National Highways Authorities of India (NHAI) during construction phases whereas the remaining 60 percent is paid as variable annuity amount after the completion of the project and over the maintenance phase. In so far as taxability of the annuity is concerned, there are apprehensions of the same that it may be taxed during the construction phase (i.e. much before the receipt thereof) which would lead to various hardships. Suitable clarifications may be provided for taxability of the same over the maintenance phase. Infrastructure continues to be the backbone of growth and employment generation and hence it is widely expected that Budget 2021 will provide for various measures to propel infrastructure development which will go a long way to achieve the bigger goal of $5 trillion economy by 2025. The writer is Tax Partner-Infrastructure sector, EY India. Ankit Kochar, senior tax professional with EY India has also contributed to this article.

Tags
indian infrastructure building materials infrastructure companies Budget 2021 Union Budget 2021 personal finance sector 2021
End of Article
Latest News
Find us on YouTube
Subscribe
End of Article

Impact Shorts

Chennai Ranks #1 in Challan Checks: ACKO Insights for Smarter Car and Two Wheeler Insurance Decisions

Chennai Ranks #1 in Challan Checks: ACKO Insights for Smarter Car and Two Wheeler Insurance Decisions

Chennai leads India in challan checks, with drivers checking their e-challans over 5 times a month on average. Helmet non-compliance is the most broken rule, accounting for 34.8% of all traffic offences in Chennai. Regular digital challan checks help drivers avoid hefty fines, promote safe driving, and improve insurance premiums.

More Impact Shorts

Top Stories

Charlie Kirk, shot dead in Utah, once said gun deaths are 'worth it' to save Second Amendment

Charlie Kirk, shot dead in Utah, once said gun deaths are 'worth it' to save Second Amendment

From governance to tourism, how Gen-Z protests have damaged Nepal

From governance to tourism, how Gen-Z protests have damaged Nepal

Did Russia deliberately send drones into Poland’s airspace?

Did Russia deliberately send drones into Poland’s airspace?

Netanyahu ‘killed any hope’ for Israeli hostages: Qatar PM after Doha strike

Netanyahu ‘killed any hope’ for Israeli hostages: Qatar PM after Doha strike

Charlie Kirk, shot dead in Utah, once said gun deaths are 'worth it' to save Second Amendment

Charlie Kirk, shot dead in Utah, once said gun deaths are 'worth it' to save Second Amendment

From governance to tourism, how Gen-Z protests have damaged Nepal

From governance to tourism, how Gen-Z protests have damaged Nepal

Did Russia deliberately send drones into Poland’s airspace?

Did Russia deliberately send drones into Poland’s airspace?

Netanyahu ‘killed any hope’ for Israeli hostages: Qatar PM after Doha strike

Netanyahu ‘killed any hope’ for Israeli hostages: Qatar PM after Doha strike

Top Shows

Vantage Firstpost America Firstpost Africa First Sports

QUICK LINKS

  • Mumbai Rains
Latest News About Firstpost
Most Searched Categories
  • Web Stories
  • World
  • India
  • Explainers
  • Opinion
  • Sports
  • Cricket
  • Tech/Auto
  • Entertainment
  • IPL 2025
NETWORK18 SITES
  • News18
  • Money Control
  • CNBC TV18
  • Forbes India
  • Advertise with us
  • Sitemap
Firstpost Logo

is on YouTube

Subscribe Now

Copyright @ 2024. Firstpost - All Rights Reserved

About Us Contact Us Privacy Policy Cookie Policy Terms Of Use
Home Video Shorts Live TV