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Resource centre on India's rural distress
 
 

Budget 2018 to focus heavily on infra, rural spend, says ICRA -Joe C Mathew

-Business Today

Social sector spending and investments in infrastructure development could be the highlights of the forthcoming Union Budget 2018-19, credit rating agency ICRA forecasts. It expects increase in budgetary allocations for social infrastructure and social security spending, such as NREGA (rural job security), food subsidy (food security), insurance schemes and welfare pensions. Larger allocations for infrastructure related to cold chains, etc., considered to boost the agricultural sector and the rural economy, are also expected.

ICRA's note on pre-budget expectations says that the agency expects enhanced allocations for infrastructure, such as affordable housing, roads, railways, ports, inland waterways and smart cities, to help jumpstart investment activity and economic growth in India. "We anticipate budgetary outlays for capital spending to be enhanced substantially, supplemented by extra-budgetary sources of funds such as institutional finance and market borrowings of the CPSEs and the NIIF".

ICRA notes that government spending on infrastructure would trigger investment by the private sector, though with a lag of two-three quarters, due to moderate capacity utilisation, availability of brownfield distressed assets, high leverage levels of various corporates and the stressed balance sheets of PSBs.

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