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Pranab Mukherjee allots Rs 173 crore for infra development in Budget 2010
Infrastructure got a boost as Finance Minister Pranab Mukherjee earmarked Rs 173 crore for the sector in 2010-2011. The year that follows will focus on development of infrastructure in rural and urban areas. The Government, he said had allotted Rs 173,552 crore for infrastructure development.
Here are the key highlights
* Increase allocation for urban development by more than 75%
* To extend 1% interest subsidy scheme for affordable housing to March 2011
* Allocation for urban development at Rs 3,500 crore
* Rs 61,000 crore allotted for rural infra development
* Allocated Rs 200 crore to Goa to restore beaches
* To loan Rs 16,752 crore to rail development projects
* IIFCL to double re-finance to banks for infra
* Road development allocation hiked to Rs 19,894 crore
* To construct 20 km of national highway each day
* Allocation for road transport raised by 13%
* To set up five more Mega Food park projects
* Allocation for slum redevelopment increased to Rs 1,270 crore
Expectations of the Infra companies
-The income of the companies engaged in infrastructure projects by way of debt or equity was exempted from tax under Section 10(23G) which was removed. It was being believed the exemption would be re-introduced. This would bring down the interest cost of the funds for the infrastructure companies as the lending institutions may pass on the benefit or otherwise improve the interest in funding for infra projects.
-Section 80-IA of Income-Tax Act provides for tax exemption on profits for 10 consecutive years to companies in the infrastructure sector which will expire on March 2010. The market expected the Section 80-IA benefit to be extended for another 10 years.
India's infrastructure story
The Indian infrastructure industry plays a vital role in the economy. Experts are of the view that for India to revert to a GDP growth rate of 9% and to sustain it in the future, due attention should be given to the infrastructure sector.
Since December 2008, India has announced stimulus packages equalling about 12% of GDP to boost infrastructure and support economic recovery in Asia's third-largest economy.
DR Dogra, MD and CEO, CARE (Credit Analysis and Research) Ltd said, “The Eleventh plan had projected about USD 500 billion investment (about 9% of GDP) in infrastructure between 2007 and 2012. Given the actual investment so far, a significant ramp-up would be required in this area.”
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