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2017 - A Golden Year for Infrastructure?
Thu, 5 Jan Pre-Open

One of the important yardsticks of economic development is the Infrastructure development. All the sectors in the economy are directly or indirectly related to the infrastructure sector.

The government of India in last two years has passed some landmark bills and has undertaken some good initiatives to propel growth in this sector. The three primary focus areas has been road, airports and railway projects.

In August 2016, India jumped 19 places in World Bank's Logistics Performance Index (LPI) 2016, to rank 35th amongst 160 countries. The LPI is a benchmarking tool which helps identify challenges and opportunities related to a country's logistics infrastructure.

However, the last two year focused more on the policy and procedural part. It is now when actual implementation is to be made. 2017 can be a make or break year for Infrastructure.

The government aims to push road, rail, airports and other infrastructural projects. Further, the government plans to speed up expansion of major ports. It recently got passed 'The Major Port Authorities Bill, 2016'.

2017 has many other things in store for the infrastructure sector. Here are some of the important trends and events to watch out for:

  1. Airports Infrastructure

    2. The Government of India plans to boost regional air connectivity by setting up 50 new airports over the next 3 years. At least 10 are slated to be operational in 2017. Further, subsidized flights and airports in remote locations would do well to boost connectivity. The Airports Authority of India also plans to develop city-side infrastructure at 13 regional airports.

  2. Energy & Power Projects

    3. The dynamics in the power generation are poised for a change as the prices of renewable power are falling at a rapid pace. This coupled with rising oil prices could bring in a change in how India generates power. The government too has made a strong push for renewable energy. India is home to the world's largest solar power plant in Tamil Nadu. This is a testament to its potential in tapping renewable energy.

  3. Real Estate Sector

    4. Implementation of the Real Estate Regulatory Authority Act (RERA)

    The implementation of the RERA act which has potential to transform the real estate sector will be the most awaited event for the sector. The RERA imposes various restrictions and stipulations on developers and aims to bring about transparency in the real estate sector.

Consolidation among real estate players

Consolidation may be the name of the game in 2017 as small developers find it increasingly difficult to continue with projects amid a liquidity crunch and look towards asset monetization; cash-rich developers and private equity funds are bound to grow faster. Large developers could buy out projects of smaller realty firms closing down operations.

Commercial Real Estate

The commercial real estate sector will look to continue its positive run even as prospects for the residential market remain gloom over the implementation of the RERA act. The outlook for commercial real estate for 2017 is likely to be robust with demand from manufacturing, logistics and consumer goods besides IT and outsourcing sectors.

The Government of India made a record allocation of Rs 2,212 billion in the union budget last year. The same is expected this year. However, implementation matters more than the allocation.

Given all the major policies and bills in place, it would be interesting to see how things turn out in 2017 for Infrastructure.

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