Budget 2021

Raise the budgetary outlay

Ramchand Karunakaran  | Updated on January 24, 2018

Ramchand Karunakaran



The coming Union Budget needs to address the issues in the infrastructure sector, including road building, with a pragmatic approach.

Infrastructure projects require long-term investments, which ideally match the long duration investments of pensions funds and sovereign wealth funds.

There should be a paradigm shift in the thought process, especially in resolving concerns related to financing infrastructure. 

The Budget should make more provisions to increase foreign investor participation in the sector. Policy framework needs to be put in place to recognise pension and insurance funds as recognised lenders; this will permit Indian infrastructure developers to avail themselves of external commercial borrowings (ECB) for repayment of loans taken from domestic banks.

Measures should be introduced to improve long-term funding availability for the infra sector. A framework is essential for banks to raise resources to finance their long-term loans to infrastructure. 

Investors’ confidence has significantly deteriorated, mainly due to lack of dispute resolution mechanisms, project price escalation and delayed policy decisions.

It is necessary to have an expeditious modus of dispute resolution.

Single-window clearance, increasing role of e-governance to fast-track pre-execution process, improved monitoring of road projects and awarding projects only when all requisite approvals are in place will all help.

Budgetary allocations to the sector should be increased to meet the target to build 30 km a day.

A clear road map for setting up an independent road sector regulator and clarity on its role is essential.



Amendment of Section 80-IA regarding upgrading existing infrastructure is a necessity. 

The tax incentives under Section 80-IA gets neutralised by paying MAT at 20.01 per cent on book profits.

Considering the general corporate income- tax rate of 30 per cent, the rate of MAT in itself is very high.

Ramchand Karunakaran is Managing Director, IL&FS Transportation Networks Ltd

Published on February 20, 2015

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