The government’s decision to raise the capital expenditure by 33 per cent to ₹10-lakh crore in the next fiscal year will boost steel and cement consumption and help the high-capex sector.
The government’s capital expenditure would be 3.3 per cent of GDP and almost three times the outlay in 2019-20.
Besides the central government investment, the continuation of the 50-year interest free loan to States for one more year and to incentivise them for complementary policy actions, with a significantly enhanced outlay of ₹ 1.3-lakh crore will spur investments in the infra sector.
Since taking office in 2014, Modi has ramped up capital spending including on roads and energy, while wooing investors through lower tax rates and labour reforms, and offering subsidies to poor households to clinch their political support.
Sajjan Jindal, Chairman, JSW Group, said the government has been giving a huge push to the infrastructure upgradation of the nation and an increase in spending on road and rail infrastructure is a testament to their philosophy.
Jayakumar Krishnaswamy, MD, Nuvoco Vistas Corp, said the significant boost for the infrastructure sector will facilitate growth of the economy and the cement industry will play a vital role.
The Government’s focus on green capital expenditure will help address the industry’s energy needs, he said.
Jayanta Roy, Senior Vice-President, ICRA, said the strong push for infrastructure-led growth with large capex is positive for the long steel and pipe manufacturers. The extension of waiver of customs duty on ferrous scrap, raw materials used in the manufacturing of Cold Rolled Grain Oriented (CRGO) and nickel cathode is good for development for steel manufacturers.
Dilip Oommen, President of Indian Steel Association, and CEO of AM/NS India, said the highest ever investment of ₹2.40-lakh crore for railways will translate into robust domestic steel demand, thus spurring private investments and job creation.
First- and last-mile connectivity for sectors like steel, ports, coal, etc with an investment of ₹75,000 crore will improve logistics efficiency, he added.