Budget Special

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[/vc_column_text][vc_column_text]The construction equipment sector is all set to recover from the economic slump with budget allocation of Rs.1.7 lakh crore under the National Infra Pipeline and several other initiatives, unlocking immense opportunities for FY2020.[/vc_column_text][vc_column_text]“The Union Budget for 2020-21, presents the government's vision for creating infrastructure for the future by proposing a healthy balance of policy measures and tax incentives. Thrust on long-term infrastructure projects like the announcement of five new smart cities, more than 6,500 infrastructure projects under the National Infrastructure Pipeline, development of a hundred new airports, 9,000 km of economic corridors, and 2,000 km of coastal roads and so on are sure to offer a much needed boost to the sector. Allocation of Rs.1.7 lakh crore under the National Infra Pipeline scheme and additional fund raising by monetization of 12 lots of highway bundles spread over 6,000 km before 2024 are expected to end the liquidity issue and instill greater confidence in the infrastructure & construction sector. The Proposal to exempt sovereign wealth funds of foreign governments deriving income in the nature of interest, dividends or capital gains in respect of investments made in "infrastructure facility" is another bold policy move likely to pique private investment interest into roads and other infrastructure projects. With the proper execution of these announcements, we expect this year to reinvigorate the sector and spur the economy.”[/vc_column_text][vc_column_text]The construction equipment sector was moving slowly last year owing to several factors including NBFC crisis, general elections and extended monsoons. Payment delays to contractors and the overall uncertainty in the economy were other contributing factors that led to a sharp decline in expenditure on roads in FY2020. At the same time, the Industry saw some tough times due to a tight financing environment. Consequently, the sluggishness hovered around the sector till December 2019, however, the situation paved the way for new policies and investment plans from the government to support the sector.

Delay in land acquisition, forced downtime, delay in project completion, unavailability of skilled manpower, inability to work with technically enhanced machines and accident-prone sites were some of the challenges which remained prominent last year. The need to create a mechanism to tackle these problems will be the focus of this year's policies.[/vc_column_text][vc_column_text]Adding to the last year's announcements of investing Rs. 2 lakh crore in the upcoming year and within the next five years, the total government expenditure on the road infrastructure was agreed to be about Rs. 17 lakh crore at Excon 2019 in Bangalore. This year's Budget 2020, has further emphasized the need to put the focus on creating an infrastructure for the future. FM Nirmala Sitharaman has allocated Rs.1.7 lakh crore under the National Infra Pipeline scheme, which marks the start of a great year, filled with immense opportunities. The focus on accelerating the highway projects by the development of 2,500 km access-controlled highways and 2,000 km of strategic highways will give the much needed boost to the sector. Monetization of 12 lots of highway bundles spread over 6,000 km before 2024 is expected to bring greater confidence to the infrastructure and construction sector. With proper execution of these announcements, we expect this year to revive the sector and bring back the economy to normalcy.

After the Budget 2020 declaration, we can understand that to revive the economy, the government has put more focus on investing in infrastructure and construction due to the multiplier effect the construction sector puts on the economy. These initiatives are expected to give a major boost to economic growth.[/vc_column_text][vc_column_text]After the budget allocation, we see continuity in major projects which were launched during the previous government. Under Sagarmala Pariyojana the central government after the budget has additionally identified 32 roads and 21 rail projects in Andhra Pradesh to improve port connectivity which will be started in 2020. Also, two project proposals have been submitted under Bharatmala Pariyojana, the construction for the same will start in 2020. Hence, this year has started on a really good note for the CE segment and infrastructure sector.

Another factor that will be prominent in the Construction Equipment industry in 2020 is technology. Technological elements like Virtual Reality, AI security and BIM are making a major impact on construction equipment productivity and efficiency. It has become necessary for every construction equipment manufacturer to equip their machines with the latest and advanced technology to make the workflow easy and resourceful.

The way the government is focusing on the construction and infrastructure sector, we can look forward to a splendid year that procures more productivity in the CE segment. The government via this budget has given us immense hope with their policies to boost the sector and fasten its pace.[/vc_column_text][/vc_column][/vc_row]

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