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Infrastructure in Budget 2008

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Abstract:

In this paper we will discuss the possible plans and measures that will be taken in budget 2008. This year the government will focus more on infrastructure and therefore, some sectors, like power and telecommunication may attract huge investments.

In accordance with the announcement made by the government regarding 2008 budget plans it is learnt that a lot of stress will be given on infrastructure and innovation. The main aim of the government is to secure the citizens' environmental as well as economic future. The Finance Minister has given a hint that sops for infra-funding under the section 10(23G) may be reintroduced in the budget 2008.

Moreover, the government will also invest into the unlisted equity of the infrastructure projects beside the listed ones. 2008 budget may grant "infrastructure status" to the pipelines that is distributing petroleum and crude products. In the 2007 budget, similar kind of benefits were announced for the gas distribution network.

However, budget 2008 may bring the total fund allocation for the physical infrastructure down and the government will be investing more in the private sectors.

Power Sector:

The government wants to provide sufficient funds to the power sector. So it is planning to allow the inflow of venture capital funds in this sector. Therefore a pass through status for this will be restored in the 2008 budget.

Within the 11th five year plan period the government is aiming to add 78,577 mega watt capacity. Therefore for this a limp sum investment, more than Rs 10,30,000 crores, will be needed. Therefore, in the budget 2008, there will be a proposal for restoring tax incentives to advance the investment process.

In the 2008 budget, the government may announce several big investments in the coal mining sector. Some giant power companies may take over the small local mines. 2008 budget may comprise the coal mining sector in the infrastructure sector list.

Some fiscal packages like, concessional duties on capital equipment imports and tax holidays on the income taxes for ten years, will also be featured in the budget.

Telecommunication and Broadcasting Sector:

Budget 2008 may allow some exemptions of taxes for the broadcasting sector, that is, the cable TV operators and the MSOs, and bring it on the same level with the telecommunication and IT sectors.

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