The infrastructure push

The Union Budget for FY22 was over and above everyone's expectations and has been very well received by the markets as well. The Budget did justice to the expectations of the markets which have already been on a roll on the positive outlook of a V-shape recovery. Sensex delivered the highest single-day gains on a Budget day in the last ten years, going up by more than 5 per cent. As being said, the government has broken the taboo and clutched the opportunity to open its purse strings for a more aggressive growth push in this Budget. Although a higher fiscal deficit owing to the liquidity measures introduced earlier was a major overhang, but even that wasn't enough to stop the government from putting this budget on the table.

Growth has been on the driving seat of this year's Budget announcements. The gross budgetary support towards capital expenditure has been increased significantly with the infrastructure sector being a key beneficiary. In spite of dealing with a resource crunch, the government has proposed a Rs 5.54 lakh crore allocation towards capital expenditure this year, which is a massive 34.5 per cent more than the previous Budget's allocation. In this allocation, there has been a major emphasis on roads and highway infrastructure, along with railways, this year.

It's no rocket science that spending on roads and highway infrastructure has a multiplier effect on several other sectors. This includes an increased demand for construction equipment, steel and cement, job creation, and more. Development of road infrastructure leads to better connectivity which in turn boosts economic activity and spurs economic growth. Therefore, the government has laid an increased emphasis on increasing allocation towards road, transport, and highways in this year's Budget with a capital outlay of Rs 1.08 lakh crore, 32 per cent more than the previous year.

Some of the listed companies which are directly engaged in building roads and highway infrastructure and stand to benefit from this are:

The second key beneficiary of the increased capital outlay this year has been the Indian Railways. The finance minister announced a record Rs 1.07 lakh crore for capital expenditure on railways this year, which is up by 34 per cent from the previous Budget. A significant emphasis has been laid down on the plans to create a 'future ready' railway system by 2030 this time around. It has also been stressed upon to lower the costs of logistics for our industries to help make the 'Make in India' initiative a resounding success. For this, several initiatives have been taken up for expanding the existing railway network. One of them being the Western and Eastern Dedicated Freight Corridor, which will be commissioned by June 2022. The government is also aiming at 100 per cent electrification of broad-gauge routes by December 2023. Moreover, several measures have been taken up for improving passenger safety and convenience.

Some of the listed companies which could be the key beneficiaries in this space are: