Infrastructure industry was accorded important space in the budget through extension of Bharat Nirman Scheme and the 31-per-cent increase in fund allocation to this scheme is expected to generate employment in semi-urban and rural areas, which can increase income levels of working people in these areas and increase the potential demand for housing finance.
Metropolitan cities like Mumbai and Delhi are poised to witness quality infrastructure development due to the forthcoming Commonwealth Games in Delhi and the promotion of Mumbai as “the world-class financial centre”. Government is providing various facilities like Tax holidays for five years in hotels and convention centres in NCR. Approval of Real Estate Mutual Fund (REMF) a perfect move to motivate investors toward real estate industry.
Critical Analysis of Union Budget 2007-08 with Cushman & Wakefield consultancy
Government plan of action: It is nearly complete and there is considerable progress in the North-South, East-West corridor project, which is expected to be completed by 2009. NHDP-III, NHDP-V and NHDP-VI are in advanced stages of planning or implementation.
C&W analysis: The completion of these projects will improve connectivity and boost cargo movement by roads. Moreover, this will lead to improved access to major consumption centres and create opportunities for development of newer growth corridors.
The following will also be a likely impact of timely completion of these projects:
• Expanding the existing manufacturing bases
• Creation of warehousing and logistics centres
Jawaharlal Nehru National Urban Renewal Mission (JNNURM)
Government plan of action: Till date,538 projects with a total cost of Rs 23,950 crore have been sanctioned in sectors such as water supply, sanitation, transport, road and housing in many cities spread over several states.
C&W analysis: JNNURM is perhaps one of the most ambitious urban infrastructure programme and its having the potential to act as a growth catalyst for India's most important cities.
Public private partnership (PPP) model
Government plan of action: The budget announced the launch of the US$5 billion infrastructure financing initiative by Citigroup, Blackstone, IDFC and IIFCL. Government also proposes to promote the flow of investment to the infrastructure sector by Real Estate Mutual Fund (REMF).
C&W analysis: India requires approximately US$320 billion for infrastructure during the eleventh Five Year Plan. Such initiatives will create the necessary finance pool for speedy implementation of critical infrastructure projects in the country. Infrastructure projects require long-term funds and policy support in the form of tax and other concessions.
Tourism Infrastructure
Government plan of action: The budget proposes to increase the provision for building tourist infrastructure from Rs 423 crore in 2006-07 to Rs 520 crore in 2007-08 nearly 20% increase in total budget.
C&W analysis: This move is to encourage tourism in India and will eventually help the hospitality and other tourism-related sectors.
Government plan of action: The budget proposes to bring down the duty on cut and polished diamonds from 5 per cent to 3 per cent; on rough synthetic stones from 12.5 per cent to 5 per cent; and on unworked corals from 30 per cent to 10 per cent.
C&W analysis: Such a move will provide impetus for Gems and Jewellery parks and Special Economic Zones.
E-Governance
Government plan of action: National e-governance programme funding increased to Rs 719 crore.
C&W analysis: This move will increase transparency in the real estate sector as it will allow easy access to land records as well as simplify procedures for property registrations, property tax, and land title checks.
As we have heard that proper infrastructure is basic mantra of success of any country and according to union budget 2007-08, our dream will come true.
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2 comments:
nice post rounding up infrastructure improvements in India.
good article...apart from increasing the budget allocation for infrastructure the govt has also increased the FDI on it to allow foreign funds to be invested on it...to sustain the growth rate of 9 and above india needs to provide the infrastructure for it...this includes
roads, power and water supply. It has become mandatory for India to develop sezs aswell. well said ' real estate and retail are like choli daman ' :)
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