Union Budget 2017 India: Promises Huge Investments in Transport Infrastructure, Railways, Roadways in Rural Areas

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The Union Budget 2017 of India unfolded on the 1st Feb, with some good news for income tax-payers, along with huge investment plans for infrastructure, transportation, and agriculture, which can boost the logistics industry in coming days. The Finance Minister, Mr. Arun Jaitley presented a joint budget encompassing even the Railway Budget, which concentrated on capital works, passenger safety, and leveraging rail-lines and addition of new railway stations, as the line-of-action.

While the above-mentioned aspects of Union Budget were conclusive on their agenda, the much-anticipated GST schedule is still underway. A shift in tax regime in next few years could bring forward stronger technology infrastructure that shall help the logistics platform to yield better benefits.

Some of the highlights of the Union Budget 2017, India that could influence logistics industry are as follows:

  • Budget allocation for highways increased to Rs 64,000 crore in FY18, which was previously Rs 57,676 crore
  • MGSY roads work stepped up to 133 km roads/day in 2016-17 as compared to 73km/day in period of 2011-14,
  • 2.41 lakh crore is allocated for the transport sector, while Rs 10,000 crore is set for investment in Bharat Net Project
  • Gross investment for infrastructure recorded at Rs. 3,96,135 crore
  • Select airports belonging to tier-II cities were up for operations and development on PPP mode
  • Basic customs duty on LNG reduced from 5% to 2.5%. Proposal was forwarded to constitute integrated cost for the petroleum market
  • Coastal roads of 2,000 kms to accelerate development for the Coastal Economic Zones
  • Forex reserves will offer a cover for one year of imports

While the economy took blow due to demonetization, which went to affect even the logistics industry, there were no particular measures announced to emerge out of the financial mess caused due to the currency ban. The Finance Minister seemed to have more programs in mind to scale up the digital-payment methods. Though funds for agriculture were increased, there were relatively no reliefs announced for those farmers or transportation, logistic professionals affected from cash crunch.

Any cash transactions above Rs. 3 lakhs will be 100% penalized, thus it may cause some disruptions in logistics sectors for those who depend heavily on raw-tenders for transactions on big projects, imports, exports, and similar activities. Though people were optimistic about the Budget 2017 to ease the cash transactions, there were no specified cartels announced for the same.

Key-points focused in the Union Budget of 2017, India for the Railways sectors:

  • Railway tariffs to be fixed on accord to cost, competition, and social obligation with IRTC, Ircon, and similar state-run companies linked to railways will be listed on the stock exchange
  • A minimum of 25 railway stations will be awarded in 2017-18, and 500 stations made friendly for differently-abled folks with facilities such as escalators and more
  • End-to-end transport solutions to be integrated for selected commodities via partnerships. Rs. 55,000 crore was designated for railways in the Budget 2017
  • Multi Mode Transport Approach shall apply for tier two cities for railway transportations and equipment division
  • 1.3 lakh crore is dedicated for disabled friendly stations and solar power
  • All coaches of the Indian Railways will posses bio-toilets by the 2019
  • A new metro rail policy is soon to be expected, which will also open up more avenues for jobs
  • Rail safety fund will see a surplus of Rs 100,000 crore in the next 5 years

Apart from the above-mentioned pointers, the Union Budget of India this 2017 saw higher allocation for Pradhan Mantri Gram Sadak Yojna and MGNREGA, which will propel the rural income, deemed to bring respite from the effects of demonetization. Attention was said to be driven to increase production of tractors, fast moving consumer goods and two-wheelers for rural area transportation, especially for farmers and exporters.

Though the Union Budget may not directly prove to be a boon for logistics industry, the same may gain sizably in transport, rural infrastructure, railway sector. However, for airfreight and seaways, there is nothing much in store as reflected in the Budget 2017. These sections of logistics may attain few benefits due to reduction (by 5%) in payable income tax limit (2.5L-5L) that could imbue greater spending habits among relevant consumers.

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