Finance minister Nirmala Sitharaman raised the government’s capital expenditure by 34.5% to Rs 5.54 lakh crore in 2021-22 compared to Rs 4.12 lakh crore budget estimate (BE) for 2020- 21. Experts said the capital expenditure plan will create assets such as economic corridors, highways and railways projects, which will spur growth and create jobs. With a Rs 5.54 lakh capital expenditure, there is a huge focus on strengthening infrastructure through industrial corridors, highways, BRT, railways, ports and power, especially with the highest-ever allocation to the ministry of road transportation and highways.
The government has already announced Rs 111 lakh crore National Infrastructure Pipeline (NIP), which would require investments. “The National Infrastructure Pipeline (NIP), which I announced in December 2019 is the first-of-its-kind, whole-ofgovernment exercise ever undertaken by Government of India. The NIP was launched with 6,835 projects; the project pipeline has now expanded to 7,400 projects. Around 217 projects worth Rs 1.10 lakh crores under some key infrastructure ministries have been completed,” Sitharaman said.
The finance minister said that the budget was taking three concrete steps to meet the ambitious target — by creating the institutional structures, by giving a big thrust on monetising assets, and by enhancing the share of capital expenditure in central and state budgets. “The NIP is a specific target which this government is committed to achieving over the coming years. It will require a major increase in funding both from the government and the financial sector,” she said.
In order to achieve the target, Sitharaman proposed to create a professionally managed Development Financial Institution (DFI) to meet long-term debt financing needs of infrastructure projects. She unveiled the government’s multi-crore plan to augment road infrastructure and economic corridors (such as a 3,500-km national highway (NH) project in Tamil Nadu with an investment of Rs1.03 lakh crores; 1,100 km of national highway works in Kerala with an investment of Rs 65,000 crore; 675km of highway works in West Bengal with an investment of Rs 25,000 crore, and national highway works of around Rs 34,000 crore covering over 1,300 km in Assam). “The enhanced spending on public infrastructure projects such as ports, railways, airports, warehousing, gas pipelines, metros, and economic corridors is laudable and welcomed by industry as that will give impetus to employment generation and attract the investment essential to lift up the economic revival,” said Niranjan Hiranandani, president, National Real Estate Development Council.
“I would like to mention four specific areas that we feel could provide the much needed demand impetus to the Commercial Vehicle sector. Firstly, the commitment to augment our country's road infrastructure with projects for building 8,500 km of highways and economic corridors augurs well for surface and road transport. Secondly, a Rs 18,000-crore scheme to augment public transport in urban areas with the addition of 20,000 new buses in a PPP model would ensure cleaner and efficient public transportation and ease congestion. Thirdly, the assurance of implementing a voluntary scrappage policy, for 20 years for personal vehicles and 15 years for commercial vehicles is positive. This is good for the environment and good for setting in motion a circular economy,” said Vipin Sondhi, MD & CEO, Ashok Leyland.
Naresh Tiwari, Chairman, AIPMA: After a deep distress of COVID pandemic such a good budget will come was not expected. A great focus has been put on infrastructure development. With the growth of construction industry our industry will also be benefited. The shuttering plywood demand will increase. It is good budget for plywood, panel and furniture industry. We had written to the government that if the agro and panel industry has to grow we have to focus on exports but there is no such initiative has been seen in this budget. I hope in next year it will definitely be taken care of. The increase of customs duty on imports will be beneficial for the domestic industry. Automobile industry has been given a boost that will also support wood panel industry demand. I would like to say to the industry players to focus on quality that will lead us in international market.
JK Bihani, President, HPMA: With the available resources to the Government, it’s a robust and growth oriented budget with considerably good increase in capital expenditure compared to last year. There is no increase in taxation, although it was expected to have Covid cess or increase in corporate tax. It will be beneficial for the entire country in which wood panel industry will also be benefited. The affordable housing scheme has been extended for one year will also benefit the plywood industry growth. The focus has been put on infrastructure but that is difficult to quantity but definitely it will be good with the expected ‘V’ shape recovery in Indian economy with balancing paint up demand.
M M Mujeeb Rahman, President of Sawmill Owners and Plywood Manufacturers Association (SOPMA): Especially for plywood and panel industry nothing has been said in the budget but for MSME there is something good that will benefit us as well. The greater focus has put on infrastructure and railways and it is basic thing for industry growth so the budget is over all good. This budge will be giving grater benefit to the corporate sector rather than MSMEs.