The government’s proposal to increase capital spending by 33% to 10 lakh crore in the upcoming fiscal year will increase demand for steel and cement and benefit capex-intensive industries. 3.3% of GDP would be spent on capital projects by the government, approximately tripling what was spent in 2019–20. Along with the central government investment, the 50-year interest-free loan to the States would continue for another year in order to encourage them to implement complementary policy measures, with a significantly increased outlay of 1.3 lakh crore.
The rise in expenditure on road and rail infrastructure is evidence of the government’s commitment to improving the nation’s infrastructure, according to Sajjan Jindal, Chairman of JSW Group. The huge boost for the infrastructure sector, according to Jayakumar Krishnaswamy, MD of Nuvoco Vistas Corp, would promote economic growth, and the cement industry will play a crucial role. The government’s emphasis on green capital spending will aid in meeting the industry’s energy requirements.
According to Jayanta Roy, Senior Vice President, ICRA, the long steel and pipe producers will benefit from the strong push for infrastructure-led growth with high capex. For the benefit of steel producers, the prolongation of the waiver of customs tax on ferrous scrap, raw materials used in the production of Cold Rolled Grain Oriented (CRGO), and nickel cathode is beneficial The highest-ever investment in railroads of 2.40 lakh crore, according to Dilip Oommen, president of the Indian Steel Association and CEO of AM/NS India, will result in strong domestic steel demand, which will encourage private investments and the creation of jobs. With an investment of 75,000 crore, first- and last-mile connectivity for industries like steel, ports, coal, etc. will increase logistical effectiveness, he noted.
