Infrastructure sector to gain from 11% higher capex in Budget, execution in focus 

There are no tax slab or surcharge changes and any further reduction may need to wait for the full budget later this year.

Finance Minister Nirmala Sitharaman’s budget speech on February 1 signalled that while the government’s focus on capacity building will continue, the country wants comprehensive and sustainable execution to ensure speed and reach.

The government allocated Rs 11.1 lakh crore as capital expenditure for the next fiscal, up 11 percent from the current year's Budget estimate. This will boost infrastructure growth and have a multiplier effect on other industries.

“The multipronged economic management over the past ten years has complemented people-centric inclusive development…All forms of infrastructure, physical, digital or social, are being built in record time,” Sitharaman said in her shortest budget speech.

Presenting her sixth budget, the minister said the government has put in place a system for the effective and timely delivery of programmes and large projects.

“Our vision for ‘Viksit Bharat’ is that of “Prosperous Bharat in harmony with nature, with modern infrastructure, and providing opportunities for all citizens and all regions to reach their potential,” the FM said.

Industry players had expected higher allocation, especially in an environment where the private sector continues to be jittery about scaling up investments.

"Infrastructure allocation increase of 11.1 percent is, frankly, below expectation after the 30 percent and 35 percent increases of the last two years. Hopefully, as this is only an interim carry-on Budget, when the full Budget for 24-25 is formulated, the government may consider going back to the 30 percent hike levels,” said Vinayak Chatterjee, Infravision Foundation Founder and Managing Trustee.

Experts are not too worried about the lower allocation, given that it is interim budget. They see a silver lining in the government’s will to push for timely execution of projects.

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While road construction has slowed, the Ministry of Road Transport and Highways (MoRTH) got an allocation of around Rs 2.78 lakh crore for 2024-25, up around 3 percent.

“Although the growth is modest at 3 percent, it indicates the government's focus on the road sector and enables the ministry to meet the completion targets for the Bharatmala and the NIP (National Infrastructure Pipeline),” said Vinay Kumar G, Vice President & Sector Head - Corporate Ratings, ICRA Limited.

In line with previous budget announcement, the government continued with the nil borrowing programme for NHAI while keeping the allocation flat at Rs 1.68 trillion in FY25 Budget Estimate (BE), he said.

Industry players said the minister’s speech indicated that the government will continue to strategically focus on key sectors that are driving growth.

Himanshu Chaturvedi, Chief Strategy & Growth Officer, Tata Projects Ltd, said, “Tata Projects welcomes the commitment to railway corridor-port connectivity under DFC, encompassing plans for more than two corridors. This signifies a notable step towards enhancing transportation infrastructure, aligning seamlessly with our commitment to building smart and sustainable projects.”

The industry also welcomed the decision to develop three major economic railway corridors that will cover– (1) energy, mineral, and cement corridors, (2) port connectivity corridors, and (3) high-traffic density corridors. This will boost projects as well as create a sustainable and inclusive transport infrastructure, they said.