Budget wishlist: Here are the key challenges in infrastructure sector

Key challenges

Domestic air traffic recovered considerably post-second Covid wave, the outlook on international travel is still uncertain. This has delayed recovery of non-aero revenues, especially from duty free, which is severely impacted due to collapse of international traffic.

Airline profitability is further challenged by the burden of indirect taxes which is in excess of 20% of their revenues, due to inability to get input credits

Roads has one of the largest expenditure commitments under NIP. However, with borrowing restricted to Rs 65,000 crore for NHAI, and budgetary support likely to be constrained by large fiscal deficit, identifying off-balance sheet finance will be major challenge for delivering NIP

Railway sector has not witnessed significant PPPs despite announcements in previous Budgets. Implementation of reforms related to corporatisation of ports needs acceleration

Industry expectations:

Roads

• Budget should provide incentives to states for monetising road assets
• Hope to see increased allocation towards road safety and transport. Last year, overall allocation was around 0.3-0.4% of ministry budget, which needs to be substantially increased

Railways

• Expect a pipeline of future infrastructure projects to be undertaken through private sector participation, along with their respective model for development
• Revised approach to private sector participation in intercity passenger rail transport by ensuring level playing field with incumbent IR
• Announcement on commercial policies and strategies, to promote adoption of dedicated freight corridor by cargo, that is moving on road
• Policy measures for promoting intra-city mobility in Tier-II cities

Ports

• Additional 8-10 PPP projects in major ports this year under the asset monestisation agenda
• Financing challenge in shipping sector has been a key impediment for ownership of vessels under Indian flag

Airports

• Allocation of higher amount to RCS UDAN to promote regional air connectivity
• Expect lowering of taxes on aviation fuel and bringing it under GST regime
• Announcement of incentives to MRO industry by lowering tax rates on imported parts for MRO
• Broad roadmap for sustainable aviation or reducing emissions expected