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Union Budget 2010 – Industry reactions


The Finance Minister’s much needed thrust to infrastructure by way of allocating Rs1,73,552 crore has received positive response from the infrastructure industry though the Real Estate players are not very much impressed with this year’s budget. We spoke to some of key industry players to understand what they think about the budget


Infrastructure sector remains main focus for the government as it has received 46% of total planned allocation. The Finance Minister in his budget made provision of Rs1,73,552 crore for upgrading infrastructure in both rural and urban area. Major emphasise has been given to development of high quality physical infrastructure such as roads, ports, airports and railways.

The allocation for road transport has been increased by over 13% from Rs17,520 crore to Rs19,894 crore. Disbursement for infrastructure by India Infrastructure Finance Company Ltd(IIFCL) is expected to reach Rs20,000 crore in 2010-11 as against Rs9,000 crore this year.

Railways to get Rs16,752 crore which is about Rs950 crore more than last year to modernise and expand the network.


Urban infrastructure didn’t receive much attention from the Finance Minister though he announced a number of urban development programme catering to poverty alleviation and housing. There has not been much mention of government’s Jawaharlal Nehru National Urban Renewal Mission (JNNURM) scheme which plays a key role in upgrading urban infrastructure. However, there has been some relief for Monorail projects for urban transport which was granted project import status at a concessional basic duty of 5%.

The government increased its allocation for various urban development programmes by 75% from Rs3,060 crore to Rs5,400 crore. The Housing and Poverty Alleviation scheme will get a hike from Rs850 core to Rs1,000 crore in 2010-11. The government has allocated Rs1,270 crore for Rajiv Awas Yojana for urban poor.


Rural infra remains one of first priorities for the government as it has stepped up its allocation to Rs48,000 crore for Bharat Nirman projects. The allocation for the Indira Awas Yojana has been increased to Rs10,000 crore for the year 2010-11.

A total budgetary support of Rs12,000 crore has been made for development of rural roads including bridges. This provision has been made under the Department of Rural Development for Pradhan Mantri Gram Sadak Yojana (PMGSY). The government expects to construct 3,65,279 km of new roads and 3,68,000 km under upgradation.


The Finance Minister has shown some generosity for this sector by doubling its outlay up to Rs5,130 crore against previous year’s allocation of Rs2,230 crore. It does not include allocation for Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY). The government has accorded highest priority to capacity addition. The total outlay for the Ministry of Power is Rs60,751.42 crore.

“We are appreciative of the budget measures to put the economy on a 9% growth target. Infrastructure, both rural and urban, seems to be a central theme this year, accounting for 46% of the overall allocation. It would certainly have an overall positive impact on the sector.”
Amitabh Das Mundhra, Director, Simplex Infrastructures Ltd

“I welcome the concern shown by the government by providing extension of one year in tax holiday for housing projects. The applicability of service tax to all under construction flats and homes being booked prior to completion will increase the end cost and this will significantly impact affordability of home buyer.”
Kumar Gera, Chairman, CREDAI

“Apart from a few measures such as extension of 1% interest subsidy scheme for affordable housing to March 2011, waiver of excise duty on solar panels and one-time interim relief to housing and real estate sector, the budget did not address issues raised by the Maharashtra Chamber of Housing Industry (MCHI).”
Pravin Doshi, President, MCHI

“It is good to see that the government has done special allocations for infrastructure development, especially in power sector and roads construction. We expect that these investments in infrastructure sector will lead to increase in demand for modern construction equipments.”
Michael Schmid-Lindenmayer MD, Putzmeister Concrete Machines Pvt Ltd

“The allocation of Rs1,73,552 crore for infrastructure development is the highest spending ever been done. The government’s support for refinancing infrastructure projects could make fund acquiring easier. It is disappointing to know that there is no forward push given for the real estate industry.”
Jitendra Jain, CEO & MD, Neev Group of companies

“It is really heartening to note the marked increase in the allocation to the power sector. We are happy that India is firmly on the path of becoming self sufficient in power and as an equipment supplying company, we are also excited at the prospects of additional business this move will generate.”
Tushar Mehendale, Managing Director, ElectroMech

“The government has placed emphasis on the need for accelerated development of high quality physical infrastructure such as roads, ports, airports and railways, which are essential to sustaining economic growth, and Rs19,894 crore for road transportation. Decision to build 20 km of road everyday is very positive and it will help in smooth functioning of the logistics sector.”
D P Agarwal, Vice Chairman & Managing Director, Group TCI

“This is a positive, growth-oriented budget. The increased fund allocation for slum redevelopment will ensure that key areas in city centres will begin to yield quality real estate supply. While the renewed focus on infrastructure is definitely positive, what was conspicuous by its absence was the formal inclusion of townships under the infrastructure umbrella.”
Anuj Puri, Chairman & Country head, Jones Lang LaSalle Meghraj

“While there are no major initiatives for real estate, the lack of extension of 80 IB benefits to new projects started after March 2008 is a missed opportunity, since it would have led to creation of large volumes of affordable housing and also spurred economic growth due to strong cross-industry linkages of the construction chain.”
Abhisheck Lodha, Managing Director, Lodha Developers

“Real Estate got a mention in this year’s budget unlike last year where it was largely ignored. The significant increase in allocation of funds by 75% to Rs5400 crore for urban development is a welcome move. The Finance Minister also announced increased allocation of Rs10,000 crores for Indira Awas Yojana.”
Anshuman Magazine, CMD, CB Richard Ellis, South Asia Pvt Ltd

“The budget was not a disappointment. The continued thrust on infrastructure development, like road, power, railways etc. gives us confidence that the business will bounce back. The clarification on excise duty rate applicable on depreciated value of construction equipments, supplied under duty exemption scheme for road projects, is a big relief.”
Anand Sundaresan, MD, Schwing Stetter (India) Pvt Ltd

“We, at Scomi Group would like to extend our gratitude to the government of India for acknowledging and incorporating monorail and urban transportation in the union budget for 2010-2011. With the government laying thrust on infrastructure growth, we look forward to speeding up of several urban transportation projects in the major metro cities of India.”
Kanesan Veluppillai, President, Scomi International & Council Member of International Monorail Association

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