Fitch Optimistic About Growth of Infrastructure Sector in India

Fitch Optimistic About Growth of Infrastructure Sector in India

Based on a comprehensive analysis of the Union Budget 2014-15, Fitch Ratings have come up with its own assessment that the policy measures adopted by the new administration can give a boost to the infrastructure sector in the long-term. Fitch says that the changes in regulatory policy and steps taken to improve funding for infrastructure development and urban development projects can help create a long-term investment cycle.

It is to be noted that the government has come up with a number of proposals for new highways, gas pipelines, development of special economic zones and ports. As per new proposals, banks would be able to lend money to infrastructure sector without much regulatory hassles for tenure of upto 25 years as opposed to current norm of 10 years. Fitch says that rationalization of coal supplies for power generation and tax benefits afforded to power generation companies are also expected to give a boost to the power and utilities sector.

According to Fitch, the proposal of REITs (Real Estate Investment Trusts) is also a positive step and tax incentives afforded in manufacturing sector are likely to drive growth and boost investment in the sector. Fitch expects the changes initiated by the new administration to lead to long-term growth in construction, real estate and capital goods industries.