Budget 2023-24 Expectation: Infrastructure sector aspires for an enhanced capital expenditure plan of Rs 10 lakh crore

Union Finance Minister Nirmala Sitharaman should consider several macro-economic factors in the upcoming Budget. The impact of pandemic on global economy is still playing out. Almost all central banks are tightening the monetary policy to combat the inflation. This is resulting in worldwide slowdown, with many of the large economies expected to get into recession. In addition, the Ukraine war is playing havoc with energy prices and supply chain logistics. While prices for many commodities have fallen from their peak earlier this year - they continue to be at levels higher than pre-COVID period. This has led to expanded working capital borrowing, rather than to fund capital investment. PLI schemes for various sectors needed The Government has taken a remarkable initiative to facilitate private investment by providing Production Linked Initiatives in various sectors. This needs to be augmented for employment generation. Private sector companies have stepped up their investment as lower tax rate is helping corporates generate higher cash accruals; however, the global uncertainties are also causing corporates to pause. Until the private sector starts sharing the burden, public sector investment would need to do the heavy lifting. Hence, the government will have to enhance public spending in key sectors such as infrastructure, which is important to nation building and improving industrial productivity. Government needs to support enhanced infrastructure investment The burden for economic growth in FY24 would fall again on public investment, and government would need to continue its pivot towards enhanced infrastructure investment. This year, we expect the government to announce a capital expenditure plan of Rs 10 lakh crore as against Rs 7.5 lakh crores in Budget 2022. With so much focus on infrastructure investment, close monitoring is necessary for getting desired outcomes. Along with fund allocations, the government should also ensure sustained monitoring. This would entail harnessing inter-ministerial and Centre-state synergies in execution. Need focused divestment of operating infra assets To fund the infrastructure investment, the government would need to accelerate divestment of operating infrastructure assets. While previous Budgets have flagged divestment as focus area, focused divestment of operating infrastructure assets through public listing of INVITs would allow Indian retail investors to diversify their investment portfolio as well as provide higher yield investment options. This would also help the Government in churning the cash generated towards fresh investments. INVITs also have been investments of choice for Sovereign Wealth Funds, who look at investing in long term stable cash generating assets. Ensure realty sector performs to full potential Regarding the construction sector, during COVID period, the government had come out with several provisions for improving the liquidity of construction sector by reducing performance bank guarantees, progressive release of retention amounts etc. This helped the sector significantly and the sectoral activity during the period was higher than pre-covid years. These provisions have been extended in the past. Would request that the Government makes these changes permanent for all future projects so that the sector continues to perform to its full potential. Sectoral mandates on green hydrogen needed India has made commitments towards net-zero by 2070. These would require significant investments and R&D. The Government has already approved National Hydrogen Mission with initial outlay of close to Rs 20,000 crores. We would expect the government to accelerate the journey by providing sectoral mandates on green hydrogen. We would also expect policies to support high focus on R&D in green energy. Set up core-working groups to assess project delays Over 70 percent of the central sector projects are facing delays with cost overrun of Rs 4.58 lakh crores. Given the scale of capital investment that is yet to come and to reduce this wasteful overrun, the government should set up a core-working group to assess key reasons that cause the delays and come out with action plan to reduce this substantially in future projects. This would require change in execution plan, project management, better technology adoption, upfront clearances, and funding etc. Improve technology, hasten digital adoption in realty There is a critical need to improve technology and digital adoption in construction industry. Dependence on unskilled labour is one of the vulnerabilities of the infrastructure sector. Infrastructure sector needs to invest in skilling, modern machinery, automation and digitization. In this Budget, the government should consider incentivising substantial increase in usage of technology in the form of tax holidays or priority in awarding of government projects. The writer is Chief Strategy & Growth Officer, Tata Projects. Views expressed are personal. Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.