Infrastructure allocation in Union Budget 2023-24 has surpassed the high expectations.

The total capital outlay is ₹10-lakh crore, a 33 per cent rise over the previous allocation, surpassing the industry expectation of around 15-20 per cent growth.

This Capex is around 3.3 per cent of GDP and the ‘Effective Capital Expenditure’(capital outlay plus grants in aid to the states) of the Centre is budgeted at ₹13.7-lakh crore, which will be 4.5 per cent of GDP.

A major chunk of the capital outlay will go to Roads, Highways, and railways. The Ministry of Road, Transport and Highways has been allocated nearly 27 per cent of the capital outlay and railways has been allotted 24 per cent.

Road to growth

The allocation to the Ministry of Roads, Transport and Highways rose around 25 per cent to ₹2.70-lakh crore from ₹2.17-lakh crore in 2022-2023. Out of this, the government plans to infuse a significant amount of ₹1.62-lakh crore into NHAI, which is a 14 per cent rise over the previous budget allocation.

According to NHAI data 16,686 KM worth projects are yet to be awarded and this could translate into an increased order inflows for companies like KNR Constructions, PNC Infratech, H.G. Infra engineering ltd, IRB Infrastructure developers Ltd. and other diversified large infra players who also operate in this space.

Finance Minister also mentioned that the government will be extending 50-year interest free loan to the states to spur investment in infrastructure and to incentivize them for complementary policy actions. The outlay for this purpose has been decided as ₹ 1.3 lakh crore.

Affordable housing

Pradhan Mantri Aavas Yojana (PMAY) is the affordable housing program of the government. In the union budget 2023-2024 the capital outlay for this scheme was ₹79,000 crore which is a 66 per cent rise. But compared to the revised estimate of 2022-23, it is a mere 3 per cent increase.

The government has also announced establishment of Urban Infrastructure Development Fund (UIDF) which will be managed by the National Housing Bank and the government expects to add ₹10,000 crore per annum to the fund.

The enhanced focus on infra and housing can provide impetus to cement sector/companies.