Post-Budget Reaction by Mr. G Sathiamoorthy – Country Manager & MD, Black & Veatch India
Power: The ‘Plug and Play’ Game Changer
“The Budget proposals presented by the Finance Minister are set to unlock the true potential of India’s power sector for investments to the tune of Rs. 1 lakh crore. The Plug and play model for the Ultra Mega Power Projects announced implies that such projects would get off the ground sooner, rather than be left stranded for the stipulated clearances and fuel linkages to be agreed. This is what makes it a reformist budget for project developers and companies such as Black & Veatch. We would also be keeping a close watch on the coal linkage rationalization recommendations by the government panel set up. On the renewables front, as was expected, the proposal of augmenting the generation target for clean energy installations to 1,75,000 MW by 2022 is envisioned to provide 24X7 electricity to every Indian household and industry. Exempting components used in wind powered electricity generators and solar PV cells from excise duty would encourage the set-up of off-grid renewable energy sources such as Roof top solar power units due to lower installation costs. Though increasing coal cess from Rs. 100 to Rs 200 a tonne would be an added cost for thermal power generators, it will be helpful for sustaining subsidies to clean energy projects.”
Infrastructure: EPC gets the booster shot
“We are happy that the budget has taken cognizance of the fact that India’s present infrastructure does not accord with her ambitions of being an economic super power. The increased budgetary allocation of Rs. 70,000 crore in addition to the establishment of the National Investment and Infrastructure Fund (NIIF) with an annual fiscal support of Rs. 20,000 crore comes as a shot in the arm for a sector that has seen long-term under-investment. What truly makes this budget confidence inducing to EPC players like Black & Veatch is the revitalizing of the PPP mode of infrastructure development wherein the sovereign would shoulder a major part of the risk. The tax pass through proposed for alternative infrastructure focused funds would help solve financial constraints. Overall, the budget reinforces the economic belief that infrastructure related fiscal stimulus would have a multiplier effect on the economy manifesting in job creation and GDP growth.”
Infrastructure: Smart Cities – In the fine print
“It was indeed a surprise for Smart Cities ostensibly not to find a mention in the Union Budget this year. More so because it is one among the several flagship programmes of the ruling dispensation with an allocation of Rs. 7060 crore in last year’s interim budget. The main announcements aligned in this regard have been those of the first phase of GIFT (Gujarat International Finance Tec-City), which is modeled as a smart city that would compete with Mumbai in becoming a hub for International financial institutions, and the Rs. 1200 crore being allocated to projects in the Delhi Mumbai Industrial Corridor. With the Dholera Special Investment Region billed to be the first to be developed as a smart city in this corridor, EPC players like Black & Veatch see many opportunities for building utility services, desalination and waste water treatment plants, power infrastructure and conduits for creating an Information and Communication Technology (ICT) network. Afterall, Smart Cities need Smarter utilities with Smart Integrated Infrastructure.”
Telecom: Importance undermined
“We at Black & Veatch believe that telecom connectivity forms the cog in the wheel for any smart city. The proposal linking Jan Dhan Yojana with mobile telephony, facilitating financial inclusion and cashless transfer of subsidies, signifies the crucial role that the sector would play. The success of the government’s flagship Digital India program hinges on the technology and telecommunications infrastructure in the country for citizens to avail broadband connectivity. The proposal to speed up the implementation of the National Optic Fibre Network apart, the imminent auction of spectrum is much needed for telecom service providers to meet the government’s aspirations. However, the increase in service tax to 14 per cent on all services provided by the government such as telecom spectrum will make telecom services dearer to the end users which may influence the progress of a truly Digital India in which half a billion Indians access government services online.”
