In the past three years, the government has announced several large infrastructure schemes like Bharatmala, railway electrification, smart cities, Amrut and Udan. The budget for 2018-19 served to ensure that these multi-year programmes received their fair share of funding. Modest 10-13 per cent growth in outlay across key sectors like roads, railways and urban infra, and lack of any new announcements indicate a shift from planning stage to implementation stage. Infrastructure programmes will now be on autopilot as the government focuses its efforts on rural and agricultural sectors. The journey has finally begun!
The budget turned out to be a continuation of the government’s well-articulated focus on infrastructure. The government had earlier announced large-scale infrastructure building plans in roads, railways, urban infrastructure, ports and airports. These programmes are targeted to be implemented over the next 5-10 years.
In case of roads, two-thirds of expenditure is to be funded through IEBR. The budgeted outlay for NHAI in FY19 stands at Rs 917 billion, up 10 per cent YoY and ~2x the spending in FY17. The government has subsumed the balance works of ongoing NHDP under the umbrella scheme of Bharatmala with an outlay of Rs 5.3 trillion. Excluding Bharatmala’s PPP component, the plan will require ~Rs 1 trillion of allocation as annual run-rate over the next 4 years. The government expects Rs 620 billion or nearly two-thirds of the outlay to be funded by NHAI’s internal and extra-budgetary resources (IEBR). Disciplined flow of cess funds to NHAI will provide comfort to lenders for extending such funding. The government’s assertion of completing 9,000 km of highways by end-FY18 indicates a pickup in execution.
In case of railways, expenditure so far has been below the target. In FY14, the government had announced investments of Rs 8.6 trillion in railways over FY15-19E. Our analysis of actual expenditure so far (FY15-17, FY18 RE and FY19 BE) indicates the government has made an outlay of Rs 5.4 trillion, far below the intended target. Rolling stock and network expansion have seen respectable progress in this period. The budget 2019 has made an outlay of Rs 1.46 trillion for railways (64 per cent through IEBR), up 12 per cent on FY18 BE and up 22 per cent on FY18 RE. Electrification target of 6,000 km in FY19 is in line with the stated goal of electrifying 24,000 km of rail track in 5 years. Electrification will provide total ordering opportunity of ~Rs 30-35 billion in FY19.
In case of urban infrastructure, various projects come under Smart Cities and Amrut programmes with a multi-year outlay of Rs 2.8 trillion. Key focus areas include metro rail, water and sewage treatment, power distribution and other civil construction jobs. For FY19, the government made an outlay of Rs 221 billion, up 13 per cent on FY18 RE.