NEW DELHI: The Capital Expenditure (Capex) drive in the Union budget for FY23, as well as the sustained focus on infrastructure development, are expected to enhance cement consumption.
In India's Budget 2022-23, a significant financial outlay of Rs 7.50 lakh crore has been set out for Capex. Finance Minister Nirmala Sitharaman suggested a 35 percent increase in capital budget outlay in her Budget statement to Parliament on Tuesday.
According to India Ratings & Research (Ind-Ra), the rise in budgetedCapexAover the revised FY22 spending estimate is projected to drive infrastructure spending, which accounts for almost a quarter of cement consumption. Furthermore, the cascading effect it has on job creation will aid in demand formation.
"After a 53% rise in expected spending in FY22 to resuscitate urban spending, which contributed to a rebound in segment cement demand, the allocation to urban infrastructure climbed marginally to Rs 635 billion for FY23 from the revised estimate of Rs 619 billion in FY22." "In the next three years, some 100 'Gati Shakti' freight terminals for multimodal logistics facilities are expected to be built." According to the agency, the government's continued focus on affordable housing, with the allocation of Rs 480 billion for the completion of 8 million houses under the 'PMAY' scheme, is likely to support cement demand from the housing segment, which accounts for around 65 percent of total cement demand.
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