The finance minister may have brought smiles to the faces of small farmers and income tax payers with debt waivers and IT relief, but the one sector that has come out frowning after P Chidambaram presented his last budget is infrastructure. The sector is largely dissatisfied with the lack of any new proposals to boost core sector spending, which has shown a marked deceleration during the year.In the energy sector, the budget has proposed to bring five more Ultra-Mega Power Projects (UMPPs) — in Chhattisgarh, Karnataka, Maharashtra, Orissa and Tamil Nadu — to the bidding stage. It has also announced the establishment of a new coal regulator in the coming financial year. However, experts said the proposals are ambiguous and uncertain.“The budget says that the five UMPPs would be brought in for bidding, subject to state support. Hence, it is highly improbable these power projects would be granted to concessionaires anytime soon,” said Kuljit Singh, partner, Ernst and Young. “Similarly, while a coal regulator has been announced, there is no clarity as to what its role would be. And, while the government was expected to announce allocations for new mining blocks, nothing has been forthcoming in this budget.”On the transport front, too, the budget has failed to excite. Even as progress on the Golden Quadrilateral and North-South-East-West (NSEW) corridor has moved forward at a snail’s pace in 2007, allocation for the National Highways Development Programme (NHDP) has been increased only marginally — from Rs 10,867 crore in 2007-08 to Rs 12,966 crore in the coming fiscal.“The budget has not provided any indication on the role of private sector in the development of highways, power transmission and distribution and urban infrastructure. Moreover, lack of cost effective financial instruments allowing long term funding of large scale infrastructure projects still remains a concern area for the private sector,” said Ankineedu Maganti, director, Soma Enterprise, an infrastructure firm.According to him, the government should have announced a mechanism to ensure expeditious implementation of infrastructure projects, since there is presently a large time gap between the announcement of a project and its award. “Further, we were expecting relief on import duty on construction equipment for all infrastructure projects and clarity on service tax applicability in several sectors of infrastructure,” he said.Experts are also disappointed with the lack of any new announcement in the aviation space. While it was expected that taxes on aviation turbine fuel would be rationalised, the finance minister has chosen not to address the matter in the budget.However, industry watchers say that the budget has also announced a few positive developments. “The FM’s decision to abolish dividend distribution tax for subsidiary companies is positive, since most infrastructure projects are executed through special purpose vehicles that are liable to pay this tax. The move will improve their valuation. Also, the reduction in duties on project imports from 7.5 per cent to 5 per cent will help companies reduce costs,” said Singh, adding that the proposal to create a national fund for power transmission and distribution reform is also a step in the right direction.
