M&H CV truck segment may see support from higher infra allocation: Icra

Slowdown-hit medium and heavy commercial vehicle segment may see some support from the increased allocation for infra sector while the government's focus on providing a holistic solution in the budget for agri-economy will augur well to uplift rural sentiment, which is a positive for the tractor and two-wheeler segment, Icra said on Saturday.

The M&HCV truck segment has witnessed a sharp 41 per cent demand contraction in the April-December period of the current fiscal, according to Icra.

Besides a higher outlay for infra projects, further liquidity support to the NBFC sector through extension of partial guarantee scheme will also be supportive to the segment in improving finance availability for smaller fleet operators with weaker credit profile, Icra said.

In line with expectation, the automobile sector, especially CVs would continue to reap benefits of government's thrust on infrastructure development, the rating agency said.

The government's effort to mobilise funds through multiple avenues besides addressing inherent bottlenecks to ensure faster execution of infrastructure projects will be critical for uplifting the sentiments of construction equipment segment including tipper trucks, it said.

According to Icra, the government's focus on improving quality of clean air in cities with over one million population will also augur well towards enhancing penetration of electric Buses in key cities.

The Government's continued initiatives towards rural development and farmer welfare in the budget remain a positive for the farming community, it said adding the government remains committed towards improving farm credit availability through increased institutional agri-credit targets.

Besides, the changes in the Income Tax slabs will result in higher disposable income for middle-class households and will therefore be favourable to revive demand for two-wheeler sector, especially during a period when vehicle prices have been on an upward trend, Icra said.