The Union Budget 2022, which will be presented in the Lok Sabha by finance minister Nirmala Sitharaman on February 1, should give a push to infrastructure projects under the National Infrastructure Pipeline (NIP), experts say, as it is crucial to economic growth.
According to EY India, a sustained momentum for infrastructure spending is critical to achieving a sustained medium-term growth of 7.0 per cent and above.
“For this purpose, NIP targets should be met. We missed the targets for the first three years of the NIP calendar,” EY India said.
“Additional infrastructure spending in the last three years of the NIP should be undertaken in order to make up for the shortfall in the first three years of the NIP. The recalibrated medium-term fiscal consolidation path should accommodate the enhanced infrastructure spending relative to the original NIP targets,” EY India added.
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Monetization of assets, particularly in the highway and railway sectors, is likely to be the central proposition for the sector, according to Sujjain Talwar, partner, Economic Laws Practice.
“In the last FY, the government made a significant headway in granting priority to the infrastructure sector. The National Monetization Pipeline and the PM Gati Shakti (National Master Plan for Multi-modal Connectivity) were certainly bold policy moves. Given this background, the expectations for the sector from this budget would be high. All in all, the focus would be on ensuring connectivity, enhancing ease of doing business and meeting India’s climate change targets,” said Talwar.
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Considering the lower expenditure during the year compared to the budgeted estimates, it is natural to consider possibilities of lower budgetary allocations for the ministries, said Padma Priya J, partner and infra expert, government, Grant Thornton Bharat.
“Given the current gradual recovery from the second wave, the economic growth forecast for our country is being cut to 8.5 per cent in FY2022-23. Uncertainties about the economic outlook seem elevated,” she said, adding, “However, the need to accelerate economic growth would drive the government to increase the capital outlays, especially in the infrastructure sector as this sector is an engine for economic growth.”
Pallavi Singh, vice-president, Super Plastronics PVT LTD (SPPL), India brand licensee of Westinghouse TV, expects a boost to Make-in-India initiatives such as building tech hub or semiconductor manufacturing or efforts to be put under National Policy on Electronics (NPE).
“Given the current semiconductor shortage in the world, our government should aid the potential sector and afford schemes under the NPE. Those aiming to manufacture in India and contributing towards the growth of the economy can be provided aid in the form of subsidies.”
Singh said the NPE can also help in providing a shoulder for our country and reducing its dependence on foreign nations if it were to correctly subsidise those who are willing to bring the relevant infrastructure, especially with respect to semiconductor/chipset manufacturing, to India.
According to Singh, this, ideally, should also be backed by tax subsiding schemes so as to reduce the burden on an entity since the quantum of investment required is huge.
She added that the NPE can also be expanded to include and aid those already manufacturing consumer electronics in India as opposed to importing them.
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