Budget Buzz

ROADS, PORTS AND HIGHWAYS: These nation-building sectors seek less announcements and more action on the ground. And this year, they might ge...

ROADS, PORTS AND HIGHWAYS: These nation-building sectors seek less announcements and more action on the ground. And this year, they might get something completely new: the government is considering using forex reserves to fund infrastrucure projects. Expect another year of lots of big-ticket plans.

Buzz in the sector

• Major initiative to channelise funds into infrastructure, including the use of forex reserves.

• Tax breaks and new schemes; final outlines of the N-S-E-W road project; uniform transportation cost structure.

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• New national policy for ports, bringing major and minor ports under one umbrella

• Demand for new policies and laws to monitor SEZs, proposal for a city infrastructure fund, in the works for years.

BUDGET RECAP 2004

• Infrastructure booty made fatter by announcing a total pool of Rs 40,000 crore by seven shortlisted FIs.

• Option of tonnage tax was introduced for shipping firms, on the request of the shipping ministry.

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• Government support to develop International Container Trans-shipment Terminal at Vallarpadam, Kochi.

• Rural infrastructure development fund (RIDF) revived with a corpus of Rs 8,000 crore.

• Sectoral FDI cap in aviation inched up to 49%, giving a fillip to privatisation of major airports.

WHAT I DON’TEXPECT IN BUDGET 2005

• Financial leasing for infrastructural development has been overlooked. There needs to be some clarity in the manner in which depreciation is charged. The Centre needs to encourage financial institutes to provide support for infrastructure.
Naseer Munjee, Senior Advisor, KPMG.

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• I do not expect any major allocation for airport development this year as although there have been talks, it still at a very primitive stage.
Dipak D Naik, Maharashtra Economic Development Council

•We should get signals on how projects must be implemented. I don’t expect the practical aspect of raising resources and taxation issues to be addressed in the budget.
Hemant Kanoria, SREI Infrastructure Finance

CAPITAL FORMATION IN INFRASTRUCTURE

• Electricity, gas, water 42,051
• Railways 9,470
• Roads, aviation, ports 19,028
• Storage 1,442
• Communication 18,899

PERFORMANCE SNAPSHOT

Port congestion remains. The congestion relating to growing container traffic saw a loss of Rs 5,000 crore worth of trade revenues. Privatisation of ports got an impetus this year with new terminals getting private backing in Gujarat, Chennai and Kolkata. Airports’ transformation and road projects have been slow.