Budget 2016: Jaitley makes the infra and investment push

The Budget targets greater funding for roads and railways; paltry sum of Rs 25,000 cr allocated for bank recapitalisation

With private sector investments failing to take off, the finance minister today increased budgetary allocations for key infrastructure areas such as roads and railways.

Arun Jaitley increased the budgetary allocation to the two sectors to Rs 2,18,000 crore hoping that greater public investments would kickstart the private investment cycle, which far outstrips government expenditure.

But fiscal constraints left little room for funds to recapitalise public sector bank recapitalisation. The finance minister has budgeted a paltry sum of Rs 25,000 crore for bank recapitalisation in 2016-17.

Infrastructure was a big theme of the budget. The finance minister today said that roughly 85% of stuck projects in the road sector are back on track. He said that 2015 saw the highest ever kilometres of projects implemented. The roads sector is now likely to be opened up in the passenger segment.

The oil and gas sector also got a special mention with the finance minister saying that for new discoveries in deep and ultra deep waters there will be a calibrated shift towards a market premium on the principle of alternate landed fuel costs.

The industry is likely to cheer the finance minister outlining the government's view on the public private partnership framework. The minister said that a resolution bill to deal with disputes in the infrastructure space will be put out shortly. Further, guidelines for renegotiation of PPP projects will also be finalised.

Public sector undertakings will be encouraged to divest existing assets to increase cash flows in order to make investments in new assets. This could potentially boost public sector investments.