The government intends to spend Rs 214,000 crore on infrastructure, 23.3 per cent higher than the allocations in 2010-11, accounting for major share of 48.5 per cent of the gross budgetary support to the central plan. Nitin Madkaikar does the math.
The Union Budget 2011-12 proposes to spend Rs 1,257,729 crore, up 13.4 per cent over the budget estimates for 2010-11. Plan expenditure is pegged at Rs 441,547 crore increasing 18.3 per cent while the non plan expenditure at Rs 816,182 crore was raised 10.9 per cent over 2010-11. The net market borrowing of the Government in 2011-12 would be Rs 343,000 crore. At this level the fiscal deficit works out to 4.6 per cent of the GDP for 2011-12, down from 5.5 per cent for 2010-11 (BE) and 5.1 per cent for 2010-11 (RE).
The Budget proposes to allow issuing of tax free bonds to the tune of Rs 30,000 crore by the Indian Railway Finance Corporation (Rs 10,000 crore), National Highway Authority of India (Rs 10,000 crore), HUDCO (Rs 5,000 crore) and ports (Rs 5,000 crore).
Step up in power and oil and gas: The plan for power is pegged at Rs 74,783 crore as against the revised estimates of Rs 52,677 crore for 2010-11. However, the 2010-11 plan failed to utilise the amount budgeted for the sector.
The outlay for petroleum is Rs 73,216 crore, up 10 per cent from both revised and budget estimates of 2010-11. Of this, over 65 per cent or Rs 48,293 crore is set for exploration and production of crude oil, while Rs 24,883 is allocated for the refining and marketing sector.
The 2011-12 Budget has allocated Rs 44,835 crore as the central plan outlay for road and bridges, as against the revised estimates of Rs 45,271 crore for 2010-11. Against a target of 2,500 km of national highways in 2010-11, the National Highway Authority of India (NHAI) has completed (by December 2010) 1,156 km at 4.28 km a day.
Infrastructure debt funds: In order to augment long-term, low cost funds from abroad for the infrastructure sector, the Budget has proposed to facilitate setting up of dedicated debt funds. A new Section 194LB proposed to provide tax to be deducted at the rate of five per cent by such notified infrastructure debt fund on any interest paid by it to a non-resident.
The Rs 20,000 deduction (over and above the existing limit on account of investment in notified long-term infrastructure bonds will continue.
FII limit for corporate bonds: The FII limit for investment in corporate bonds issued by companies in infrastructure sector, is being raised by an additional limit of $20 billion, taking the limit to $25 billion. This will raise the total limit available to the FIIs for investment in corporate bonds to $40 billion. Since most of the infrastructure companies are organised in the form of SPVs, FIIs would also be permitted to invest in unlisted bonds with a minimum lock-in period of three years. However, the FIIs will be allowed to trade amongst themselves during that period.
Capital investment in fertiliser production will be given the status of “infrastructure sub-sector”.
Rural Infrastructure Development Fund XVII corpus will be raised to Rs 18,000 crore in 2011-12 from Rs 16,000 crore in the current year. The additional allocation would be dedicated to creation of warehousing facilities.
The author is Head (Research), FIRST Infocentre.