Budget may give boost to infra sector

Finance Minister Pranab Mukherjee is likely to announce steps to boost the infrastructure sector in his Budget tomorrow with a view to sustaining over 9% growth in the coming years.

The initiatives could include raising the limit for investment in tax saving infrastructure bonds and providing special thrust to plan expenditure for sectors like road, energy, ports, airports etc.

Currently, investments up to Rs 20,000 per annum in infrastructure bonds enjoy tax exemption.

Mukherjee may also announce setting up an Infra Debt Fund (IDF), as was suggested by an expert panel headed by HDFC chief Deepak Parekh in June, 2010 to resolve financing issues of the sector.

The Parekh Committee had recommended setting up IDF with an initial corpus of Rs 50,000 crore for financing projects in this crucial sector and was to be managed and regulated by market regulator SEBI.

The fund, aimed at providing longer-term capital to infrastructure, could provide a boost to the public-private partnership (PPP) projects, thereby pushing investments in key areas like roads, ports and power, among others.

According to the Economic Survey for 2010-11, 293 projects or over 52 per cent of the ongoing 559 infrastructure projects are running behind schedule as on October, 2010 and steps are required to accelerate the pace of infrastructure development further.

Simultaneously, the Survey also said that investment in the key infrastructure sectors like power, roads, ports, airports among others, is expected to increase to 8.37 per cent of the GDP or over Rs 4 lakh crore in 2011-12.

Moreover, the government proposes to raise investment in infrastructure sector to $1 trillion in the Twelfth Five Year Plan (2012-17) from $500 billion in the current plan.

A bigger budgetary support is likely to be provided to implement Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY) and Re-structured Accelerated Power Development Reforms Programme (R-APDRP), which is meant for reducing transmission and distribution losses in the power sector.