Recognising that infrastructure would play a key role in reviving the economy, the government today allowed IIFCL to raise Rs 30,000 crore for refinancing projects mainly in the highway and port sectors.
India Infrastructure Finance Company (IIFCL) will access the market for raising the first tranche of the amount by way of tax-free bonds over and above Rs 10,000 crore provided earlier.
Earlier, as part of the first stimulus package, IIFCL was allowed to raise Rs 10,000 crore through tax-free bonds for refinancing long-term bank lending to infrastructure projects that are public-private partnerships.
That will be made accessible within a week, the government said, while unveiling the second stimulus package.
"Banks are not able to lend for the long term because there is an asset-liability mismatch. This (allowing IIFCL to raise funds) will take care of that. Raising Rs 30,000 crore through tax-free bonds means refinancing projects worth Rs 1,00,000 crore. This will enable funding highways and ports mainly," IIFCL Chairman and Managing Director S S Kohli told PTI.
He said the move will boost demand for raw materials like cement and steel and provide employment.
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The Rs 10,000 crore will help in funding PPP projects of about Rs 25,000 crore, the government said.
Analysts said the package is well-targeted and will prevent a further downslide in the economy.
"It is well-targeted and will help to stimulate growth. Downside risks of growth could be prevented and the step will provide some relief," Crisil Principal Economist DK Joshi said.