Sector

Announcement in Budget

Implications

Impact

Power

Government is drawing up a plan for 15-20 years to augment investment in nuclear power and for this measure Rs. 3,000 crore per annum have been proposed.

The measure is aimed at boosting the country’s nuclear power generation capacity and will mean increased overall installed capacity of power generation in the country. The move is also aimed at expediting nuclear power generation facilities in the Country so as to utilize nuclear fuel from recent civil nuclear deals with other countries. Such a roadmap and investment will help move India's stuck Nuclear Programme forward. This will lead to a more balanced energy mix.

Key companies to be benefited: NPCIL, Bhavini, UCI, Nuclear Fuel Complex, NTPC etc.

POSITIVE

5,542 villages have been electrified and remaining villages to be electrified soon. Rs. 8500 Crores for  Rural Electrification in FY 2017

Rural electrification is critical in terms of socio-economic development of rural areas. This move is expected to bring incremental infrastructure requirement for power transmission and power distribution.

POSITIVE

Roads and Highways

Under the Pradhan Mantri Gram Sadak Yojana (PMGSY), the government will be spending an amount of Rs 19,000 crore for connection of remaining 65,000 eligible habitations by 2019.

This move will increase the road connectivity across the rural areas and will prove vital for socio-economic development of these 65,000 eligible habitations.

Key companies to be benefited: NHAI, Infratech companies, Small Contractors, subcontractors

POSITIVE

Completion of 10000 kms of national highways in 2016-17

The completion of roads will create demand of steel and cement and at the same time will also result into better connectivity for to-and-fro transportation of machineries, raw materials and finished goods. The move complements well with government’s smart cities initiative.

POSITIVE

Additional 50000 kms of state highways will be taken up for up gradation as national highway

Conversion of state highways into national highways is on governments priority list as the government is mooting to develop more and more quality roads and highways for connectivity. This move will mean good quality highways in the states that are more prone to industrial activities and are strategically important.

POSITIVE

The Government has allotted Rs 55,000 crore for Roads Highways excluding Rs 15,000 core for National Highways Authority of India (NHAI) Bonds in this year's Budget.

This will mean increased investment in the sector and will bring about cheer to the developers in the roads and highways sector. The real beneficiary would be developers under NHAI and subcontractors.

POSITIVE

Motor Vehicles Act to be amended to enable entrepreneurship in the road transport sector.

This move is directed towards ending the permit raj in the road transport sector and will give a big boost enabling of  entrepreneurship in the road transport sector.

POSITIVE

Railways

Propose to take up North-South, East-West & East Coast freight corridors through innovative financing including PPP.

The proposed freight corridors will mean effective connectivity between the key strategic regions of the country and will mean less congestion in the key routes for freight transport. The move will be a big positive once the corridors are complete as it will increase railways revenue as well.

Key companies to be benefited: Coal India Ltd., SAIL, BSPL, NTPC, NLC, Reliance power, Tata Power, JSPL etc.

POSITIVE

Railways Ministry have proposed a total investment outlay of Rs 1,21,000 crore in 2016-17.

The boost in investment and outlay will mean increased construction and development activities in the railways and will also mean effective execution of the proposed activities across the railways.

POSITIVE

Implementation of rail connectivity for the ports of Nargol and Hazira under PPP in 2016-17.

Ports are crucial for the import and export activities across the country and huge numbers of industries and manufacturing companies depend upon connectivity with the ports for efficient and timely freight transport. This move will bring smooth freight transport and will provide rail port connectivity which will prove boon for many industries.

POSITIVE

Time-tabled freight container, parcel and special commodity trains on a pilot basis, container sector would be opened to all traffic barring coal, specified mineral ores and part-loads during the non-peak season. All existing terminals/sheds would be granted access to container traffic, where considered feasible.

This will be a challenge for the government and if executed properly will mean very efficient and timely freight trains across the crucial trade networks in the country. This move will boost container oriented freight transport and will bring cheers to the industries that depend upon railways for their goods transport.

Key companies to be benefited: DFCCIL, CONCOR etc.

POSITIVE

Proposed to develop Rail side logistics parks and warehousing in PPP mode, 10 goods sheds will be developed by TRANSLOC, the Transport Logistics Company of India, in 2016-17.

This move again is being taken to bolster the railways logistics support and to increase the freight revenues. The measure will mean that the warehousing and storage capabilities will increase and the railways may lure in more players for freight transport.

POSITIVE

Coal

Clean energy cess increased from Rs 200/ tonne to Rs 400/tonne on coal, lignite and peat

Doubling of clean energy cess will have a bearing on the price of power, coal and steel.

Key companies to be impacted: JSPL, Reliance Power, Jindal Power, Tata Power, Monnet Ispat Energy, etc

NEGATIVE

Port and Shipping

Government is planning for developing new greenfield ports in the eastern and western coasts of the country.

Will unleash the untapped potential in the Ports sector and will attract investments. The incumbent government has already showed its willingness to promote inland waterways and coastal trans-shipment. Hence, development & de-bottlenecking of major and minor ports becomes crucial.

Key companies to be benefited: IMC Ltd, Adani Ports, Essar Ports, Other private sector port companies, etc.

POSITIVE

Rs 8,000 crore has been provided for Sagarmala project.

Sagarmala project is a huge plus for the port and shipping sector and the government aims to reinforce the scheme by providing continuous budgetary support. The investment will help in smooth execution of the project and development of new ports in the country’s coastal regions and last mile connectivity to several stuck port and shipping projects.

Key companies to be benefited: IMC Ltd, Adani Ports, Essar Ports, Other private sector port companies, etc.

POSITIVE

The work on the National Waterways is also being expedited. Rs 800 crore has been provided for these initiatives.

National waterways provide for one of the best alternatives for the goods and passenger transport and the utilization of these waterways has been very less when compared to other developed nations. The government knows this too and this move is aimed at increasing activities in national waterways.

POSITIVE

Fertilizer

Introduction of Direct Benefit Transfer (DBT) of fertilizer subsidy on pilot basis in a few districts of the country.

About INR 73,000 Crores is paid in fertilizer subsidy annually to the manufacturers of controlled fertilizer urea. The latest Economic Survey of India, however, asserts that the indirect subsidies suffer from different types of leakages and only 35% of the total subsidy reaches the intended beneficiaries, small and marginal farmers. The DBT scheme will help plug these leakages and if implemented on a larger scale, massively reduce costs for small and marginal farmers and improve in part, the critical financial stress being faced by such farmers.

POSITIVE

Renewables

Raising of tax free bonds up to INR 21,300 by various power and infrastructure financing agencies such as PFC, IREDA, NABARD etc.

These bonds will be utilized towards the wider power and infrastructure funding but presence of renewable focussed agencies such as IREDA and lenders such as PFC which are increasing their renewable funding portfolio, will positively impact the renewable energy sector as more funding will be available for renewable energy based projects.

POSITIVE

Accelerated Depreciation will be limited to 40% from 1st April 2017

This is reduction from the presently available 80% Accelerated Depreciation benefit and will impact the tariff structures of Renewable Energy companies availing these benefits. The tariffs will see a marginal increase due to this and renewable energy will become marginally expensive for the off taker. This will negatively impact commercial and industrial establishments looking to install rooftop solar post 1st April 2017.

NEGATIVE

Water

Prime Minister's Krishi Sinchai Yojana (PMKSY)  has been strengthened and 28.5 Lakh Hectares will be brought under irrigation under this scheme.

Of the 141 Million Hectares of net cultivated land in the country, only 46% is covered with irrigation. Irrigation is a fundamental requirement for crop yields and is at the crux of dire financial condition of small and marginal farmers. Strengthening of the PMKSY is a step in the right direction and will increase irrigation cover substantially, if it is implemented efficiently.

POSITIVE

Implementation of 89 irrigation projects under Accelerated Irrigation Programme Benefit (AIPB) will be fast tracked. This will help irrigate about 80.6 Lakh Hectares of land. INR 17,000 Crores allocated for FY-17 and INR 86,500 Crores allocated for the next 5 years. Government will ensure 23 of these are completed before 31st March 2017.

Implementation of the identified projects will help relieve distress being faced by farmers in terms of crop yields and poor financial accounts. Fast tracked implementation of remaining identified projects and bring relief to areas where it is needed immediately.

POSITIVE

Long term irrigation fund will be created in NABARD with an initial corpus of INR 20,000 Crores to achieve all these measures. INR 12,517 Crores has been provisioned through budgetary support and market borrowings in FY 2016-17

Long term fund to be created in NABARD will help development of irrigation across the country over a longer duration of time and help bring more land under the irrigation cover which will result in increase in rural demand. Farmers have faced severe drought conditions during the past two years in various parts of the country. These measure will bring relief to long term uncertainty being faced by farmers over water availability.

POSITIVE

Automotive

1 per cent service charge on purchase of luxury cars over Rs. 10 lakhs. 1% CESS on petrol cars, 2.5% on diesel vehicles and 4% as high capacity tax for SUVs.

This will impact the sales of diesel and SUV cars which currently occupy about 40% of all sales. There have been concerns about rising air pollution levels, primarily due to expanding use of diesel cars. This is a good measure for controlling air pollution levels in cities but will impact the demand for diesel vehicles resulting in lower sales.

NEGATIVE

Clients