Union Budget 2012: What infra companies are looking forward to

The past year was not a pretty one for our economy, and needless to say the infrastructure space was hit hard. Problems such as fuel shortage, elevated prices of imported coal and poor financial position of SEBs weighed down the sector, making it one of the most underperforming sectors of 2012. Adding fuel to the fire were the constraints banks imposed on lending towards the sector.

Going into Budget 2012, the topmost priority is to see more inflow of investments. This means allowing banks to raise tax free paper for funding infra projects similar to those given to NBFC infra companies. There is also a hope that the FM will provide a greater thrust towards increasing the flow of retail savings into infra debt by enhancing the exemption limit in infra bonds for retail investors from Rs 20,000 to Rs 50,000 or higher. The government is also expected to make positive announcements regarding other demands of the sector, such as higher gas allocation to the power sector, increasing the import duty on imported power equipments and waving the duty on imported coal. Listen to the accompanying audio for more Budget expectations for the infra space.. So as to promote rural infra development, such as roads and railway, hopes are that the government considers the annuity model instead of market-driven public-private partnership projects which usually fail. Allocation wise, the money given to NHAI, Indian Railways and DFC is likely to show flat to rising trend, with much more emphasis on proper utilization of the funds. In terms of corporate tax, expectations are that the sun-set clause on tax incentives for infra projects is likely to be extended by one more year, and that the difference between MAT and income tax will be reduced. Some experts also say that they expect a new infra ministry to be announced to handle the huge set of challenges in a concerted and comprehensive manner. The biggest wish is that this Budget gives investors all over the world a reason to trust this country and invest capital here.