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Last Updated : Jul 05, 2019 10:00 PM IST | Source: Moneycontrol.com

Budget 2019 | Rail, road emerge as clear winners in infra space

In the Budget speech, the finance minister stressed on continuous investment in construction of highways and flagship programmes such as Bharatmala and Sagarmala projects

 
 
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There is good news for the capex-led sectors. The non-defence capital outlay has been pegged at Rs 2,074 billion, a jump of 12.2 percent compared with the Budget estimates of 2018-19. Within this, the road and railways sector continues to get the bulk of allocation.

In the Budget speech, the finance minister stressed on continuous investment in construction of highways and flagship programmes such as Bharatmala and Sagarmala projects. Besides, she also talked about upgradation of 1,25,000 km of roads under the Pradhan Mantri Gram Sadak Yojana with an estimated expenditure of about Rs 80,250 crore over the next five years.

Overall, the Ministry of Road Transport and Highways has got an increased allocation of Rs 721 billion, up 21 percent compared to the Budget estimate of Rs 595 billion for 2018-19.

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One of the important issues touched in the Budget is funding of projects. The government intends to widen the corporate bond market and take measures such as corporate guarantee, development of funding institutions and increasing limit of foreign portfolio investments.

The other important area the FM has highlighted is investment in railways. The minister said close to Rs 50 lakh crore will be required during 2018-30 as against the current annual investment run rate of about Rs 1.5-1.6 lakh crore.

Meanwhile, for the fiscal 2020, the Ministry of Railways has got Rs 658.4 billion towards capital expenditure, which is 24 percent higher than fiscal 2019 budget estimated figures. Modernisation of stations, rolling stocks, electrification of railway line, safety, capacity augmentation have been the main areas of focus, which should augur well for the companies in the sector like state-owned RITES, IRCON, RVNL and a few private ones, including KEC International.

The finance minister also highlighted need for the PPP (private public partnership) model in the Railways, which is key to growth, considering the government’s limited resources and fiscal pressure. This should expedite the pace of spending as well as increased opportunities for the private sector companies in the long run.

Within the Railways, construction of metro projects too remains a big focus. The FM said metro rail projects of 210 km were operationalised in 2019, taking the total to 657 km so far. The work is gaining pace with a higher budgetary allocation, with emphasis on other means of funding like creating special purpose vehicles and stressing on PPP models in metro projects. This is good news for companies like BEML and L&T, which have been active in metro rail projects.

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First Published on Jul 5, 2019 07:47 pm
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