Union Budget 2023 – Impact on Infrastructure Sector

1. Capital Investments- Just like the last two years, even this year there is an increase in capital investment in this industry. This time there is an increase of 33% which is INR 10 Lakh crore. This is thrice the budget for 2019-20.
2. Results of investments- As investment in infrastructure results in a positive multiplier effect, the government has ultimately tried to also enhance growth potential and job creation, attract private investments, and provide security against global headwinds.
3. Creation of capital assets- Other than the direct capital investments, there is also a provision made for the creation of capital assets through Grants-in-Aid to states. The ‘Effective Capital Expenditure’ of the Centre is budgeted at ` 13.7 lakh crore, which will be 4.5 percent of GDP. 
4. Support to the state government for Capital Investment- The Finance Minister also proposed to continue the 50-year interest-free loan to state governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions, with a significantly enhanced outlay of ` 1.3 lakh crore.
5. Private investments- The newly established Infrastructure Finance Secretariat will work with all stakeholders to encourage more private investment in infrastructure, particularly in sectors like power, roads, and trains that rely heavily on public funds.
6. For last and first-mile connectivity for the ports, coal, steel, fertilizer, and food grains industries, 100 essential transportation infrastructure projects have been identified. They will be given first priority along with an investment of 75,000 crores, including 15,000 crores from private sources.
7. Regional connectivity- To increase regional air connectivity, 50 more airports, heliports, water aerodromes, and advanced landing grounds will be revived.
8. UIDF- An Urban Infrastructure Development Fund (UIDF), similar to the RIDF, will be created using the shortfall in loans to the prioritized sectors. The National Housing Bank will be in charge of managing this, and public institutions would use it to build urban infrastructure in Tier 2 and Tier 3 cities. States will be urged to use funding from the 15th Finance Commission’s grants and other programs to implement reasonable user fees while accessing the UIDF. We expect to make available INR 10,000 crore per annum for this purpose.

Top 5 Stocks in the infrastructure industry

Since the Union Budget states a good capital investment in the infrastructure industry, these stocks might have a bullish long term outlook. Having said that, investors should analyze all fundamental parameters before investing.

Also read: Announcements Regarding Personal Income Tax Slab

Angel Says

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