The finance minister has emphasised his commitment to the infrastructure in the budget. The question is: will this change the fortunres of the sector? In other words, what does it mean to investors in infrastructure funds?
"The budget has a strong thrust on infra sector, especially roads and railways. Infrastructure mutual fund schemes investing in companies which are involved in construction work of roads, etc will definitely benefit," says S Krishna Kumar, CIO and EVP, Sundaram AMC.
The budget has made a provision of ₹ 2,41,387 crore in 2017-18 for transportation sector as a whole, including rail, roads, shipping. For 2017-18, the total capital and development expenditure of Railways has been pegged at ₹ 1,31,000 crore. This includes ₹ 55,000 crore provided by the government.
"The intention is positive, a lot of measures are being taken but the accumulated mess is quite a lot in this space," says Rajeev Thakkar, CIO, PPFAS Mutual Fund.
He believes that the issue has not been the lack of infrastructure projects or funds, but whether the commitment is met once the money is invested. For example, the government says renewable energy is a big push for it. But when entrepreneus set up large solar wind farms, distribution companies don't buy the power as per their commitment. "Instances like this have happened in the past," adds Thakkar.
"I don't think anything dramatic will happen. You may see some positive stock movements in the short run because of the feel good factor," says Thakkar. He doesn't advocate thematic funds and believes that investors should stick to diversified funds. "Existing investors in infrastructure funds can use this opportunity to move to diversified funds, he adds.
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