Government targets $750b funds for infrastructure

Amidst the various fund raising initiative of the central government, the new tax saving scheme is likely to help the country infrastructure requirement, which have been pegged as high as $750 billion and with the government announcement of borrowing of over Rs. 3, 00,000 crore for the current fiscal and alternative fund tapping initiatives will also meet the government’s infra spending requirements. The government plans to deepen the bond markets, offer tax breaks and make it worthwhile for insurance firms to park funds in building infrastructure.

As of now collective tax benefits are given for an investment of Rs. 1 lakh in insurance, pension schemes bonds, mutual funds, children’s education and housing loans and the additional benefit of up to Rs. 1.5 lakh is currently allowed only for housing loan interest payments. As per Planning Commission estimates, the country would need around $500 billion to build infrastructure during the remaining period of the 11^th plan. However, country’s top private sector bank ICICI chairman R V Kamath has pegged the capital need for the infrastructure sector even higher at $750 billion, over the next three years.

According to experts in the field, the road development is a one shot panacea for all the economy’s ills as it creates demand for growth, job for the poor and resulting in a big boost to income across the country. Initiatives should be taken to categorize toll collections as tangible asset as it would help highway developers to secure more loans from banks and make financial closure easily achievable, said, Chief Managing Director IRB Infrastructure. He said adding that the government should also allow developers to use external commercial borrowings to retire their costlier loans. Also there is an urgent need to take a fresh look on the concession period which needs to be extended, said another expert.

NBMCW