The Government would have to strike a delicate balancing act for Union Budget 2020 amidst the lower growth in GDP and grim global economic outlook. To achieve the target of a $5 trillion economy by 2025, it would be imperative to identify the key engines of the growth.Globally, economies have grown by leveraging infrastructure as one of the key growth engines. It generates employment, creates new avenues for business, attracts investments, etc. In other words, infrastructure could have a multiplier effect on the economy.A recent report by the task force for the National Infrastructure Pipeline (NIP) has outlined plans to invest a substantial sum of over INR 102000 billion in various infrastructure projects during 2020-2025. Therefore, it is expected that a roadmap would be provided to give more clarity regarding budgetary resources, execution plans, etc.The steps taken by Government in the past for improving infrastructure have been noteworthy e.g. introduction of PPP in railways (TEJAS), upgrading airports, new aircraft, etc. There is a need for the continued impetus for similar initiatives to keep up the pace of infrastructure growth.Union Budget 2019 had announced setting up of Credit Guarantee Enhancement Corporation (CGEC) to enhance low-cost capital for infrastructure financing. Amidst stringent financial stress on banks and financial health of infrastructure companies, CGEC should be further augmented by expanding the existing channels and attracting foreign capital would go a long way in addressing the funding concerns of the sector.Introduction of FASTag technology to collect toll revenue on highways seems to be a positive step towards minimizing cash usage, optimization of toll revenues and reduction of congestion. The ambitious target of reaching approx. 2 lakh km of national highways by 2025 envisages significant involvement by the private sector. A lot would depend on NHAI’s asset monetization initiatives by way of InvITs and TOT, toll securitization, etc.NIP task force report envisages the development of high-quality MRO facilities in the aviation sector for reducing operating costs and making air travel more refundable. Union Budget 2019 had also indicated the introduction of suitable policies for the development of Maintenance Repair and Overhaul (‘MRO’) Industry in India. Thus, it is expected that the government would bring about measures to attract investment and boost participation. Also, given these peculiar challenges which the aviation sector is currently facing, it is widely expected that the government will provide further clarity on the increase in FDI in the aviation sector.The Tax Ordinance (Amendment) Act, 2019 gave a pleasant surprise to the Indian economy by reducing the effective tax rate for existing companies at 25.17% and 17.16% for new manufacturing companies. The NIP task force recognizes that the success of the ‘Make in India’ program, especially having regard to the manufacturing competitiveness of Indian firms, critically depends on infrastructure. Therefore, it is expected that the beneficial rate of tax should be extended to infrastructure companies especially the ones executing projects of strategic and national significance. This will propel the infrastructure spend and generate vast employment opportunities in India which is the need of the hour.Given the complexity of the work involved, specialisation required, and the gestation period involved, various companies usually come together as consortiums to bid for infrastructure projects. The taxability of consortiums in India has been a contentious issue historically with the tax authorities treating certain consortiums as AOPs. The Union Budget 2019, by introducing enhanced surcharge, has increased the effective tax rate applicable to AOP at 42.74%. In order to encourage more participation and invigorate the investment in such critical projects, it is expected that the effective tax rate of AOP should be brought at par with that of domestic companies 25.17%Since infrastructure companies are typically required to form special purpose vehicles with holding companies, the Government should consider the following:Abolishment of Dividend distribution tax, which will consequentially mitigate disallowance under Section 14A of the Income-tax Ac,1961 which has been plaguing the industry since long;Relaxation in thin capitalisation rules for infrastructure companies;Fiscal consolidation i.e. filing of a single consolidated tax return by all group companies/subsidiaries of infrastructure holding company;The Government has constantly recognized the importance of focusing on the infrastructure sector as one of the key cornerstones to achieving overall progress. Union Budget is likely to focus on measures to propel economic growth through enhanced infrastructure spend to keep up with the Government’s agenda of driving the Indian economy back on a maintainable growth trajectory.The author is a Tax Partner at EY India. Views expressed are personal.