With the unveiling of the National Infrastructure Pipeline, NIP, the central government has made its resolve clear to realise the $5 trillion economy by 2025. The big bang infrastructure push with a planned capital expenditure of Rs 102 lakh crore, will focus on building ports, airports, motorways, irrigation canals, smart cities, et al. With this mega infra push, India which is the world's second largest market for cement - the primary building material - will see the consumption of cement increase by over 6%.
The government's planned capital expenditure on infrastructure has addressed a key reason for the broader economic slowdown which resulted in capacities to remain idle and factory expansion budgets to dwindle. According to trade analysts, the government’s infrastructure investment plan will boost the cement sector's demand by 5-6%. The Housing for All scheme is also likely to gather momentum. Expanding pipeline facilities and creating power sector infrastructure in the coming months as part of the recent announcement will directly help sectors such as cement and steel.
Good monsoon and an expected healthy Rabi crop will further revive cement demand from rural hinterland. Lower fuel prices and maintenance cost is likely to set off the negative realisation in Q3FY'20.
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