Finance Minister Arun Jaitley has announced more spending on infrastructure and rural area development. Effective for financial year starting April 1 the Union Budget 2017 includes a generous Rs 3.96-lakh crore being allocated for infrastructure development, which is about 80 per cent higher than the budget estimate of 221,246 crore for FY17.
Additionally, the new budget sees 24 per cent hike in spending on rural areas and 35 per cent more to improve Dalit lives.
Development of rural areas will offer more income generating sources, which will eventually lead to increasing purchasing power among potential customers. Moreover, revised tax benefits for the salaried class will see decent sales numbers for the automakers. This also adds value to government’s fight against black money as reports indicated that most of the cash transaction for purchasing a new vehicle took place in rural areas. Rural areas have always seen more demand for the two-wheelers as well as the SUV category and with fresh development, we expect to see a further rise in its numbers.
A considerable investment towards infrastructure development will offer better connectivity across cities and within city limits. This will encourage more automakers to set-up their facility and be in line with the government’s make-in-India initiative. More localisation will also mean more affordable vehicle being introduced in the country. Focusing on the rural as well as infrastructure development is also seen as government’s efforts to move from informal to a formal economy.
To read more on excise duty and GST implementation read here.
