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Infra spending unlikely to lift steel industry

Infra spending unlikely to lift steel industry

Infra  : Rating agency, Fitch Ratings has told that the increased infrastructure investing in the budget 2016-17 is unlikely to provide a increase to local steel requirement growth.

As per reports, local steel producers also face over-capacity, which is likely to weigh on their profitability and credit metrics in the near term.

Commenting on the issue, a Fitch Ratings Official told the media, “For 2015-16 fiscal, the govt had budgeted for infrastructure investment to double from actual spending in 2014-15.

Moreover, except for a pick-up in road construction (up 36 per-cent Y-o-Y in H1 FY’16), project implementation seems to have been weak so far in 2015-16.”

“We expect steel requirement growth to improve slightly to 7-8 per-cent in 2016-17, supported by a pick-up in govt infrastructure spending with better project execution,” he also contributed.

As per reports, the Govt has allocated a total outlay of Rs 2.21 lakh crs in the Budget for 2016-17 to boost infrastructure in the country.

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