A planned approach to gradually target Infrastructure spend as 9 per cent of GDP is a good step. An increase in NHAI planned expenditure of 23 per cent would signify higher number of projects on Government spending plus an increase in permissible Viability Grant Amount for projects under the PPP model.

With a dynamic Minister in Mr Kamal Nath at the helm, plus the increased allocations, one should expect the transportation sector to grow much faster if issues such as land acquisition are tackled and a speedier dispute resolution mechanism is set up.

The significant increase in allocation for various programmes such as JNNURM or projects under National Action Plan like for the Ganga River and rural programmes such as Rural Electrification Scheme and Gram Sadak Yojana are all in line with the government desire to push infrastructure spending across the urban and rural areas.

The increase in refinancing support by IIFCL up to 60 per cent to commercial banks would further ease liquidity. However, it remains to be seen at what rates and for what tenure these loans are refinanced as this would directly impact the infrastructure developers who are the ultimate borrowers. In the absence of a separate Road Financing Corporation, perhaps it would be advisable for the government to consider that IIFCL concentrates on being a re-financier and thus multiply its role, instead of also taking a direct lending position as it does presently.

The long standing demand of the industry to permit re-financing of PPP Projects in foreign currency continues to remain unaddressed in spite of the sound fundamental reasoning put forth by the industry.

Also, on the Capital markets and Taxation front, the government continues to ignore the unique features of an SPV (special purpose vehicle) company. The industry request to re-introduce Sec 10 (23) G in some manner to rationalise the DDT treatment and the deemed capital gains treatment remains unfulfilled.

In the absence of the above, it appears that the companies would continue to invest horizontally by parking the proceeds of one SPV in another instead of the money flowing upwards in the hands of the holding company. This would be a deterrent from a capital market perspective. Also, the increase in MAT to 15 per cent will hurt profits as infrastructure projects enjoy a 10-year tax holiday but still have to pay the Minimum Alternative Tax anyway.

The proposal to provide tax incentives for investment in central grid will, however, encourage players in the transmission sector.

Well-structured infrastructure projects that can be speedily implemented are the need of the hour. Ultimately, good projects will always get money at the best times and also in the not so good times of the money markets.

All in all, a satisfactory push to the infrastructure sector on the macro front. But today what India needs is for its Infrastructure development programme to move forward in a rush for at least a decade more, and not merely to chug along. The Budget will more be remembered for an opportunity missed to streamline the much needed micro improvements which, at the end of the day, are so very essential in determining whether you want a sector to merely perform or to really flourish.

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