Budget 2020 Brings Good News for Transport Infrastructure Sector

There is no doubt about the importance of transport infrastructure for the economic growth and sustainability of a country. India is no exception, as it requires significant infrastructure development to enhance the overall growth. However, it calls for a lot of investment and support from the government.

The 2020 budget has arrived with some good news for the transport infrastructure sector. It clearly seemed to enable further development of transport infrastructure, while working in sync with the National Infrastructure Plan (NIP). The budget also stressed on resource mobilization through private sector participation and asset monetization.

The transport infrastructure investment and development falls in the category of the government’s set priorities with a total outlay of Rs 1,69,637 crores for 2020-21. The budget also intended to address the financing issues being faced by the sector. It announced Rs 22,000 crores in equity support to Infrastructure Finance Companies, such as IIFCL and a subsidiary of NIIF.

Roads and Highways and Shippings have been key beneficiaries, as their budget has been increased by 10.6 per cent and 18.2 per cent over FY20.  When it comes to the Infrastructure giants, key players like Larson & Toubro, KNR Constructions and IRB Infra look set to benefit.

Undertaking development of highways, further plans have been outlined by the government with proposed development of 2500 km access control highways, 9000 km of economic corridors, 2000 km of coastal and land port roads and 2000 km of strategic highways.

Apart from this, other important projects announced include Delhi-Mumbai expressway, to be completed by 2023 and a proposed Chennai-Bengaluru expressway. With increased outlay of 19500 crores to PMGSY, the focus on rural and last-mile connectivity was also evident in the budget.

The government also seemed keen on asset monetization, along with recycling, as the FM proposed to monetize at least 12 lots of highway bundles of over 6000 km before 2024. Since the government introduced Toll-Operate-Transfer (TOT) model in 2016, it has auctioned TOT bundles to private companies for the purpose of monetizing public-funded highways.

Additionally, the government has also been actively pursuing the InvIT route of asset monetization and the Union Cabinet has already approved proposal from NHAI (National Highway Authority of India) for the same.