Budget bonanza The `1 million-crore push

The Union Budget for 2023-24 aims at reviving the domestic demand and public investments to propel growth as the world is gripped by the fear of a possible recession.

The announcements made by Union Finance Minister Nirmala Sitharaman while presenting the Union Budget 202324 focuses on increased spending on infrastructure and rural housing, reigning in the deficit and bringing the economy back on track apart from job creation.

Capital Investment outlay has been increased by 33 percent to `10 lakh crore, which would have a multiplier effect on the economy and drive demand for steel.

Hiked outlays on infrastructure and agriculture will have a force multiplier impact on the economy while increased outlay towards energy transition, Railways, affordable housing and urban infrastructure will trigger the enablers for growth, analysts said.

The Budget also said 50 additional airports, helipods, water aero drones, advanced landing grounds will be revived to improve regional air connectivity and the outlay for PM Awas Yojana is being enhanced by 66 percent to over `79,000 crore.

These are steps in the right direction and would support the growth of infrastructure sector, the major sector consuming steel, industry experts believe.

“Demand from the infrastructure and affordable housing, accounting for 40 percent of cement and 35 percent of steel demand, is set to see robust 10 percent-12 percent growth in upcoming fiscal,” CRISIL Research said in an analysis.

On the logistics front, 100 critical transport infrastructure projects, for last and first mile connectivity for ports, coal, steel, fertilizer, and food grains sectors have been identified.

They will be taken up on priority with investment of `75,000 crore, including `15,000 crore from private sources. This will support the growth of logistics infrastructure.

Decision to facilitate availability of raw materials for the steel sector, exemption from Basic Customs Duty on raw materials for manufacture of CRGO Steel, ferrous scrap and nickel cathode is being continued.

Similarly, the concessional BCD of 2.5 percent on copper scrap is also being continued to ensure the availability of raw materials for secondary copper producers who are mainly in the MSME sector. These will provide further impetus for growth of the metals sector.

The recently launched National Green Hydrogen Mission, with an outlay of `19,700 crores, will facilitate transition of the economy to low carbon intensity, reduce dependence on fossil fuel imports, and make the country assume technology and market leadership in this sunrise sector.

To encourage sustainable behaviour, a Green Credit Programme will be notified to incentivize environmentally sustainable actions by companies, individuals and local bodies, and help mobilize additional resources for such activities.

This, along with the Budget plan for `35,000 crore priority capital for the energy transition are steps towards green transition.

In furtherance of the vehicle scrapping policy mentioned in Budget 2021-22, the budget has allocated adequate funds to scrap old vehicles of the Central Government. States will also be supported in replacing their old vehicles.

The capex focus

The FY24 Union Budget focuses on sustainable economic recovery through infrastructure creation.

On the domestic front, the capex of `10 lakh crore and the capital outlay of `2 Lakh crores put up for the modernisation and expansion of the Indian Railways is the highest ever outlay.

The Budget has also proposed to set up an urban infrastructure development fund with an annual allocation of `100 billion to develop urban infrastructure in tier II and III cities.

The government has maintained its focus on capital expenditure with a budgeted growth of 37 percent in FY24 Budget Estimates to `10 lakh from from FY23 Revised Estimates of `7.3 lakh crore.