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01-Mar-2011 3:03 PM

India's 2011/12 budget to support infrastructure development

Analysis

India's new federal budget is likely to help companies developing airports in India, with the government raising the limit for foreign institutional investors to invest in corporate bonds specifically targetted for infrastructure from USD5 billion to USD25 billion.

Summary
  • India's federal budget increases foreign investment limit for airport infrastructure bonds from USD5 billion to USD25 billion.
  • The government allocates USD2 billion in funding for airport development.
  • A new service tax on air travel is introduced by the Union Government.
  • GMR Infrastructure's stock gains 3.1% and GVK Infrastructure's stock rises 2.1%.
  • Positive market reaction to the budget announcement for Indian infrastructure companies.
  • The article includes selected share price movements for ABD on 28-Feb-2011.

The government assigned USD2 billion in funding for airport development. Air travel has not been unscathed, however, with the Union Government introducing a new service tax on air travel.

In trading yesterday, Indian infrastructure companies finished stronger, with GMR Infrastructure gaining 3.1% and GVK infrastructure up 2.1%

Selected ABD daily share price movements (% change): 28-Feb-2011

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