Reaction to the Union Budget 2012-13 - Mr. Indresh Batra, Managing Director, Jindal SAW

The Union Budget 2012-13 presented by the Hon'ble Finance Minister provides great opportunity for the infrastructure sector. It lays emphasis to meet growing needs of infrastructure sector with signs of an economic recovery in India. For India to attain its envisaged 6.9% growth during the coming financial year, the requirement for sustainable infrastructure development is crucial to provide impetus to the economic activities and achieve optimum resource utilization.

Also, as stated by The Minister, infrastructure will require Rs.50 lakh crore in 12th Plan, half of this from the private sector; this would boost the sector as with a growing economy and a two digit growth expected over the next four years, infrastructure sector would require a lot of growth and the right amount of incentives. The sector needs to increase private investment in various forms, including Public Private Partnership (PPP) as it not only provides the much needed capital but also help to lower costs and improve efficiencies in a competitive environment.

Besides this, the announcement on development of urban infrastructure including metro rail projects, road building, comprehensive water management and sewage treatment plants in various cities in country, introduction of much awaited implementation of GST and the reduction on withholding tax on external commercial borrowings, airlines, roads, bridges, affordable houses and fertilizer sectors would foster the sector's growth.

The full exemption from basic customs duty to coal mining project imports and LNG would show signs of recovery in various sectors but at the same time hike in excise duty and service tax would adversely affect the growth prospects of the industry and result in higher cost to the consumer, in turn leading to inflation.

Source : Equity Bulls

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