Strategic boost for Viksit Bharat

The Union Budget 2024, places a strong emphasis on infrastructure, urbanisation, and industrial advancement, represents a sea change in the development of India prioritising increase in private sector engagement, promoting sustainable urban development, and improving skill development in the construction industry through strategic investments and policy reforms.

Finance Minister Nirmala Sitharaman in her seventh budget presentation, introduced a series of groundbreaking initiatives poised to transform the construction and infrastructure sectors. The budget highlights the government’s steadfast dedication to fostering development, enhancing connectivity, and stimulating growth across various industries, with a strong emphasis on employment and skilling. Here are the key takeaways from the budget that are set to propel the construction and infrastructure industry forward in the coming years:

Infrastructure and road development
The budget has increased the capital allocation for the Ministry of Road Transport & Highways (MoRTH) by 3 percent, raising it to Rs. 2.72 lakh crore in FY2025 BE from Rs. 2.65 lakh crore in FY2024 RE. This increase, though modest, reflects the government’s commitment to completing crucial projects under the Bharatmala and National Infrastructure Pipeline (NIP), ensuring sustained focus on road sector development.

Vinay Kumar G, Vice President & Sector Head – Corporate Ratings, ICRA Limited, expressed optimism about the increased allocation for MoRTH, indicating that it will help meet the completion targets for key projects and support rural connectivity through PMGSY Phase IV. Sanjay Gupta, Chairman & Managing Director, APL Apollo Tubes Limited, highlighted that the increased infrastructure spending will create significant opportunities for the structural steel industry, enhancing connectivity and stimulating economic growth.

Industrial and economic growth
The Union Budget 2024 emphasizes the ‘Make in India’ initiative by strengthening domestic manufacturing and promoting self-reliance, with significant investments in industrial corridors such as the Vishakhapatnam-Chennai Industrial Corridor to stimulate industrial growth and economic development. The budget also supports MSMEs with enhanced credit facilities and includes job creation initiatives like PM Awas Yojana Urban 2.0, aimed at driving employment and consumption to foster a robust economic environment. Additionally, a substantial allocation of ₹11.11 lakh crore for capital expenditure, representing 3.4percent of GDP, underscores the government’s focus on infrastructure development, expected to enhance connectivity, reduce logistical costs, and improve transportation efficiency, thereby boosting overall economic productivity.

B. Santhanam, CEO, Saint-Gobain India and APAC, praised the budget for its focus on job creation, consumption, and women’s empowerment. He highlighted that investments in key projects and industrial corridors will boost infrastructure and ensure food security, supporting the ‘Make in India’ initiative. Vinayak Pai, CEO & MD, Tata Projects, welcomed the budget’s allocation for capital expenditure and its focus on promoting private investment through viability gap funding. He emphasized that this aligns with Tata Projects’ vision for contributing to nation-building and infrastructure development. Ms. Kavita Shirvaikar, Acting Managing Director, Patel Engineering Limited, lauded the budget’s emphasis on infrastructure development, including the introduction of long-term interest-free loans to states and the promotion of private sector participation. These measures are expected to enhance connectivity and productivity across various sectors.

Energy and sustainability
The Union Budget 2024 promotes sustainability and renewable energy with initiatives like the PM Surya Ghar Muft Bijli Yojana, aimed at installing rooftop solar plants for ₹1 crore households to support the clean energy transition. Additionally, the new policy for pumped storage projects will enhance the integration of renewable energy sources, ensuring a stable power supply. The budget’s focus on sustainability is further highlighted by the removal of customs duty on lithium, making renewable technologies more affordable and accessible.

Industry leaders have welcomed these green initiatives. Sanjay Gupta, Chairman & Managing Director of APL Apollo Tubes Limited, expressed enthusiasm for the PM Surya Ghar Muft Bijli Yojana, aligning with their commitment to sustainability and clean energy solutions. Similarly, Raman Bhatia, Founder & MD of Servotech Power Systems Ltd., praised the budget’s strong focus on solar energy. This emphasis on sustainability, combined with strategic investments in infrastructure and manufacturing, positions India for substantial progress, reinforcing its status as a global economic powerhouse.

Private sector participation and urban development
Encouraging private sector investment in infrastructure through viability gap funding and enabling policies is a cornerstone of this budget. Ms. Kavita Shirvaikar, Acting Managing Director of Patel Engineering Limited, praised this move: “Encouraging private sector participation through viability gap funding and market-based financing frameworks will foster a dynamic environment for infrastructure advancements.” Furthermore, the launch of Phase IV of the Pradhan Mantri Gram Sadak Yojana (PMGSY) aims to provide all-weather connectivity to 25,000 rural habitations. This initiative is crucial for integrating rural areas into the national economic framework, fostering inclusivity and growth at the grassroots level.

The budget also places a strong emphasis on urban development. Prashant Sharma, President of NAREDCO Maharashtra, highlighted the significant steps towards affordable housing and urban infrastructure: “The government’s commitment to making housing more affordable, with a ₹2.2 lakh crore push under the PM Awas Yojana-Urban, is a significant step forward. Addressing the housing needs of one crore poor and middle-class families reflects a robust and inclusive approach to urban development.”

Employment and skilling form the bedrock of sustained infrastructure development. Dr. Vikram Mehta, MD of SPARTAN Engineering Industries Pvt. Ltd, emphasised the importance of safety and skill development: “The significant reforms announced by our Finance Minister in the areas of employment, women empowerment, skill development, and support for MSMEs represent a progressive India on the global stage.” A significant portion of the budget is dedicated to employment and skill development, with an allocation of ₹2 lakh crore. The budget’s focus on creating job opportunities for ₹30 lakh youths in manufacturing and supporting skilling programs for 20 lakh individuals is expected to boost productivity and enhance infrastructure development. Ashwin Sheth, Chairman and Managing Director of Ashwin Sheth Group, acknowledged these efforts, stating, “The comprehensive focus on efficient urban planning and skill development will elevate the quality of urban living and support the real estate sector.”

A vision for ‘Viksit Bharat’
The overarching theme of the budget is the pursuit of ‘Viksit Bharat’ (Developed India). Sitharaman outlined nine priorities, including urban development, infrastructure, and innovation, which will guide the government’s sustained efforts. “This budget details some of the specific actions to be initiated in the current year towards fulfillment of these priorities with potential for transformative changes,” she emphasised. Industry leaders have lauded the Union Budget 2024 for its comprehensive and forward-looking approach. Rajan Aiyer, Vice President and Managing Director of Trimble, South Asia Region, commented, “The increased focus on infrastructure development and rural upliftment will significantly benefit the infrastructure and construction industries, driving growth and innovation.” “The budget’s emphasis on infrastructure and urban development offers significant opportunities for startups and construction companies,” said Aaditya Sharda, Co-founder of Infra.Market. He pointed to initiatives like ‘Cities as Growth Hubs’ and the abolishment of the Angel tax for all investors, which will strengthen the startup ecosystem and spur innovation across sectors. Gul Basantani, Partner at Forvis Mazars in India, echoed these sentiments, stating, “The substantial capital expenditure and efforts to encourage private investment are set to transform the industry landscape significantly.” HIL Ltd. (a CK Birla group unit) praises the government’s budget for its focus on inclusive development and infrastructure, including a record ₹11.11 lakh crore in capital expenditure and ₹2.66 lakh crore for rural development. The women-first initiatives are also commendable. This approach promises sustainable progress and broad national impact – Akshat Seth, Managing Director & CEO, HIL Ltd.

Amit Sharma, Managing Director & CEO of Tata Consulting Engineers, praised the budget’s focus on green growth with a ₹35,000 crore investment. He highlighted the adoption of clean energy projects and private participation in the nuclear energy arena as transformative steps towards a sustainable energy transition.

India’s infrastructure and construction industries have a planned and ambitious roadmap outlined in the Union Budget 2024. “Significant investment the Central Government has made over the years in building and improving infrastructure has had a strong multiplier effect on the economy,” as Finance Minister Nirmala Sitharaman succinctly put it. This budget carries on that tradition. It paves the way for a more resilient and inclusive economic future by tackling connectivity, power, state cooperation, private investment, safety, job creation, and skill development. The building and infrastructure sector is well-positioned to play a key role in propelling India towards its objective of “Viksit Bharat” as these initiatives take shape.

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