Budget 2022-23: Higher allocation in infra sector to fuel economic recovery

Brokerages expect government spending on infrastructure to continue in FY23 with sizeable growth in capital expenditure in roads, highways, railways, defence, and housing sectors

Brokerages expect government spending on infrastructure to continue in financial year 2022-23 (FY23) with sizeable growth in capital expenditure in roads, highways, railways, defence, and housing sectors.

The recently launched National Infrastructure Pipeline, Gati Shakti, and National Bank for Infrastructure Financing & Development (NaBFID) will boost investment-led growth and provide a public sector-led capex push, while private capex will be driven by the production-linked incentive (PLI) schemes, brokerages said.

“We expect 25-30 per cent higher allocation year-on-year to the Ministry of Road Transport & Highways in the Budget. This would greatly speed up the construction of highways and expressways,” said Axis Securities.

Additionally, the National Highways Authority of India’s asset monetisation plan is expected to gather steam. The aggregate length of assets considered for monetisation under the National Monetisation Pipeline (NMP) over FY22-FY25 is estimated at 26,700 km and can garner over Rs 1.5 trillion. Capital released from this is to be deployed in road construction, Axis Securities added.

In logistics, introduction of a warehousing policy and a National Logistics Policy to create a single-window e-logistics market is expected.

“We expect the potential warehousing policy to propel growth via public-private partnerships. Warehouses to be built on outskirts of major cities along highways or expressways. This would improve connectivity and lessen congestion in cities,” Edelweiss Research said.

The government could also focus on modernisation and automation of Indian ports in the Budget to lower logistics costs, said ICICI Direct.

Continued focus on improving connectivity and speedy implementation of projects like Bharatmala for the road logistics sector, Dedicated Freight Corridor (DFC) for the Railways, and Sagarmala for waterways is likely, said ICRA.