Interim Budget 2019 Reaction - Shubham Jain, Group Head, Corporate Sector ratings - ICRA Ltd

Impact: Marginally Positive

The capital outlay for roads, railways, and metro projects have been budgeted to increase by between 12 to 19% in 2019-20 over the 2018-19 revised estimates (RE). The increased capital outlay is proposed to be supported by higher budgetary allocations in railways, and metro projects, while for roads it is primarily by way of higher NHAI's internal and extra-budgetary resources (IEBR, which is largely through debt raised by NHAI). This would make the funding availability dependent on NHAI's ability to increase IEBR significantly.

Capital outlay towards some key schemes related to infrastructure sector has also been projected to increase in 2019-20 BE. The capital outlay towards Pradhan Mantri Gram Sadak Yojna (PMGSY) is being increased by 22.6% to Rs. 19,000 crore, Pradhan Mantri Krishi Sinchai Yojna (PMKSY) by 15.3% to Rs. 9,516 crore, AMRUT and Smart Cities Mission (Urban Rejuvenation) by 10.6% to Rs. 13,900 crore in 2019-20 BE over 2018-19 RE.

On the other hand, budgetary allocation towards National Investment and Infrastructure Fund (NIIF) remains modest at Rs. 1000 crore. NIIF, India's sovereign wealth fund, which was proposed to have a corpus of Rs. 40,000 crore in FY2015 has gradually started gaining traction. Given the huge capital requirement for the infrastructure sector, NIIF can play a vital role in augmenting capital available for infrastructure sector. A higher allocation would have provided more visibility to NIIF for making investments in infrastructure in the country.

Shares of ICRA LTD. was last trading in BSE at Rs.3019.95 as compared to the previous close of Rs. 3019. The total number of shares traded during the day was 511 in over 13 trades.

The stock hit an intraday high of Rs. 3019.95 and intraday low of 2997. The net turnover during the day was Rs. 1531732.

Source : Equity Bulls

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