Post Budget Analysis | Metals: Iron and Steel

<span style="font-weight: bold;">Proposals</span><br />
<ul>
<li>Increase of 21 per cent in allocation for the infrastructure sector from Rs 4.94 lakh crore to Rs 5.97 lakh crore.</li>
<li>Growth of 22 per cent in investments in railways towards capacity creation.</li>
<li>Construction of 51 lakh rural and 37 lakh new houses in urban areas. </li>
<li>Higher budgetary allocation for the Pradhan Mantri Krishi Sinchai Yojna and the AMRUT scheme expected to benefit steel pipe manufacturers.</li></ul><br />
<span style="font-weight: bold;">Impact: Moderately Positive</span><br />
The government¦s thrust on infrastructure, which is one of the key end-user industries for the steel business, is an encouraging trend for steel demand. Within infrastructure, significantly higher capital expenditure earmarked for affordable housing, power transmission and railways is likely to augment steel demand. Given that the sector is freight-intensive, investments in railway capacity would help the industry in addressing transportation bottlenecks over a longer term. Overall, the impact on the iron and steel sector remains moderately positive.<br />
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T V Narendran, CEO &amp; MD Tata Steel</span><br />
The Finance Minister has presented a Budget which is both balanced and positive. Focus on rural infrastructure, agricultural output and farmer income will help reduce the agrarian distress and boost the rural economy. Emphasis on health, education and employment generation would promote inclusive growth.<br />
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Higher spending on infrastructure with a focus on airport capacity expansion and transportation, especially de-bottlenecking of the railways will definitely boost steel demand as will the focus on affordable housing. We also believe that the spending on infrastructure will further help reduce the cost of doing business as it will drive greater efficiencies in logistics.<br />
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<span style="font-weight: bold;">Dilip Oommen, MD, Essar Steel</span><br />
This is a good and inclusive Budget. It seeks to resurrect rural uplift, critical in giving a boost to the economy, which is largely agrarian in nature in India.<br />
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The focus on infrastructure, the MSME sector, rural electrification, rural housing, food processing and the railways (through increased spending) is a definite positive for the steel industry. We were hoping for reduction in duties/cess on some key raw materials used by steel producers, but unfortunately they have been left untouched.<br />