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Infrastructure Today Magazine | Opinion: Infra to be India’s Lifeline in the Post-COVID World
Opinion: Infra to be India’s Lifeline in the Post-COVID World
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Nearly $1.4 trillion investment is needed for infrastructure development in India. The revival and strong performance of the infra sector is key to achieve the ambitious target of $5 trillion economy set by Prime Minister Modi for 2025.
By MANJU YAGNIK
The Indian infrastructure sector is a significant driver in the growth and development of the Indian economy. Not only this, the sector is also responsible for spearheading the growth of other sectors as well, thus, resulting in India’s overall development. Its scope includes power, bridges, dams, roads and the development of urban infrastructure.
The Govt of India remains sharply focused on creating world-class infrastructure in India, by way of allocating huge infra development fund, adopting PPP model, encouraging REITs and INViTs and creating an environment for the ‘ease of doing business’ and ‘single window clearances.’ Currently, the government is spending nearly 9 per cent of India’s GDP on infrastructure.
Considering the impact of COVID-19, the Govt of India recently amended existing consolidated foreign direct investment (FDI) policy for curbing opportunistic takeovers and acquisition of Indian companies from neighbouring nations. The new rules will also apply to ‘the transfer of ownership’ of any existing or future FDI in an entity in India, directly or indirectly. This measure will help safeguard the interest of Indian companies.
Nearly $1.4 trillion investment is needed for infrastructure development in India. The revival and strong performance of the infra sector is key to achieve the ambitious target of $5 trillion economy set by Prime Minister Narendra Modi in the next few years. This way we can gauge the importance of the development of Infrastructure for a developing economy like India. In December 2019, the government launched the National Infrastructure Pipeline (NIP) for FY 2020-2025, which is a major step towards infra development in the country.
Apart from overall infra development, the government’s focus on building smart cities across the country will help generate employment which is the need of the hour. Efficient public utilities are the basis of a planned smart city which helps in improving quality of life for people living in it through its offerings like a clean and sustainable environment.
The impact of COVID-19 on the sector has been sharp as construction projects worth Rs 590 billion are stuck due to construction work coming to a standstill. To bring the momentum on track it is important to prioritise the projects strategically. In this scenario, the real estate sector is utilising technology to the hilt by way of establishing communication with existing and prospective homebuyers, enabling virtual tours of construction sites and sample flats and closing the deals online.
For home buyers this is the apt time to invest and buy their dream home as interest rates are on a downward trajectory and property prices are attractive. So, homebuyers can scout for properties of their choice and take maximum advantage of this situation. The recently announced 25 per cent reduction in TDS on rent till March 2021 and extension of assessment getting barred from March 2021 to September 2021 would leave more time for home buyers to plan better financially.
The time is also very opportune for non-resident Indians (NRI)s to invest in the Indian real estate as the currency has fallen, property prices have rationalised, stamp-duty been reduced and ready reckoner rates have remained unchanged. These measures would enable them to firm up their decision of investing in India. This scenario, however, may be short-lived.
On the industry front, the impending ‘New Rent Policy’ and existing ‘Housing for All’, would be taken up on priority. The grant of Rs 250 billion Alternate Investment Fund to revive stuck projects is a big step in the direction.
Besides, liquidity push for non-banking financial company (NBFC)s, housing finance company (HFC)s and micro-finance institutions (MFI)s and credit guarantee scheme worth Rs 450 billion for NBFCs will help housing sector. Also, the change in classification period in NPAs from 90 days to 180 days would prove beneficial for developers and home buyers in the current scenario.
FMs booster dose to firms in the micro, small and medium enterprises sector (MSME) would help speed up manufacturing, job creation and wealth generation. With Rs 3 trillion collateral free automatic loan for four years, one-year moratorium on interest payments and the provision of Rs 200 billion subordinate debt will surely help the stressed MSME sector.
Supported by all this and more, the infra and real estate sectors remains upbeat about an economic turnaround sooner than later.
Manju Yagnik is Vice Chairperson, Nahar Group & Vice President, NAREDCO (Maharashtra)
National Infrastructure Pipeline
Small And Medium Enterprises
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