Union Budget 2021: What it means for infrastructure

One of the steps taken to boost the country’s economic growth is fund flow through long-term debt financing in the infrastructure sector. The exclusive funding to infra projects through Development Finance Institution (DFI) will improve the development of infrastructure and real estate structure. It will reduce the burden of commercial banks. The Finance Minister has announced Rs.20,000 crore for the DFI. It has now enabled the Foreign Portfolio Investors (FPI) to debt finance REITs and InvITs. 

Out of the record allocation of Rs.1.1 lakh crore provided to railways, Rs.1.07 lakh crore is allocated to the capital expenditure. Some sections of the Eastern dedicated corridor will be taken up this year in PPP. It would also take up three future dedicated freight corridor projects. The National Railway plan for 2030 is prepared to increase the modal share of Railway in freight from the current level of 27 per cent to 45 per cent. 100 per cent electrification of Broad gauge routes by 2023.

The National Infrastructure Pipeline has now been expanded to 7,400 projects. The government has covered more projects with an allocation of Rs. 111 lakh crore over the next five years. 

It is proposed to introduce Agricultural Infrastructure and Development Cess (AIDC) on some specific goods including gold, silver, alcoholic beverages, petrol, diesel, cotton, peas, and apple. This is an initiative towards improving the agriculture infrastructure and help increase the remuneration to the farmers. The fund can be utilised to add 1000 more mandis to e-NAM.  

The Union Budget announced PPP mode for major ports to support the ports, shipping and waterways sector in 2021-22. Ship recycling capacity to be doubled by 2024 and subsidy support scheme of Rs.1,624 crore is announced to promote flagging of merchant ships in India.

The Budget 2021-22 has taken key initiatives in the petroleum and natural gas sector. Ujjwala scheme extended to cover one crore more beneficiaries. It is proposed to add 100 more districts to the city gas distribution network in the next three years. Setting up of Independent Gas Transport System Operator is proposed to facilitate and coordinate the common carrier capacity booking in all-natural gas pipelines on non-discriminatory open access basis.

The Vehicle Scrappage Scheme is introduced to cut down environmental pollution. As per the policy, a fitness check is required after 15 years for commercial vehicles and 20 years for personal vehicles. 

For any clarifications/feedback on the topic, please contact the writer at namita.shah@cleartax.in

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