The Indian economy has stabilized after going through a phase of high inflation and interest rates. The country’s fundamentals have strengthened at the end of current fiscal, owning to the containment of inflation at 3.81 per cent and estimated fiscal deficit at 3.5 per cent of GDP. On the other hand, forex reserves have surged to over USD 367 billion and repo rates declining to the lowest level of 6.25 per cent, since 2011.
India has achieved a robust growth of 7.1 per cent in FY 2016-17, driven by all the aforementioned aspects. If not for demonetization, the GDP growth could have been more robust. However, on the other side of the spectrum, the reform also channelized the vast amounts of idle funds back to the economy, which is a defining positive development.
These funds can be utilized in aiding country’s sluggish infrastructure scenario. The implementation of GST is further going to enhance the country’s productivity and efficiency, on the back of faster logistics movement and simplification of taxation structure. It will play a vital role in fast-tracking the infrastructural projects.
Meanwhile, leading road infrastructural companies like IRB Infrastructure Developers Ltd are increasing their focus on strengthening internal competencies to expedite execution pace to reduce project turnaround time and free-up resources to take on new projects.
The demand for quality infrastructure combined with these healthy initiatives is likely to boost the growth prospect of the Infrastructure sector. While the government’s highest ever budgetary allocation of Rs 3.96 lakh crores to the sector will only add to the advantage.
By allotting Rs 64,900 crores for roads, transport and highways, the government is playing its part to lay the foundation for robust growth. Out of the Rs 64,000 crores, 63 per cent has been allocated for roads and bridges, while 37 per cent has been given to NHAI.
The time is ripe for the road and highway developers like IRB Infrastructure to keep building a healthy pipeline of assets and offer stabilized ones periodically to unlock the tied-up capital. This business model is set to enable the firms to grow further, while maximizing returns to the shareholders.
