The government is considering a proposal to push gold-based financial products to meet the funding requirements of the infrastructure sector as part of the steps to promote long-term savings in the critical area.
A panel, headed by economic affairs secretary R Gopalan, met today to discuss various steps for developing the capital markets for intermediating long-term savings for investment in infrastructure.
Representatives from the Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI), Planning Comm-ission and banking and financial institutions, who are part of the group, attended the meeting.
A senior finance ministry official said the steps envisaged for this purpose included expansion of gold-based financial products with the option of physical redemption and would also involve jewellers in the process.
He said five-year locked-in gold deposits from individuals was one of the steps under consideration.
Other measures to achieve this objective include real estate investment fund and utilisation of corporate bond market.
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The official said the idea behind the whole exercise was to look at monetisation of the existing stock of physical assets.
The steps being looked at by the panel are expected to generate Rs one lakh crore funds for investment in the infrastructure sector in 2016.
The government in 2011-12 initiated a series of steps to deepen the capital market and encourage investment in infrastructure sector. The steps included raising the FII investment limit in long-term infrastructure bonds, corporate bonds and government securities.
The limit on external commercial borrowings (ECB) was also raised and qualified foreign investors were allowed to invest in specified Indian mutual funds and directly in equities.
This has been followed in 2012-13 Budget with the announcement of ECB facilities for civil aviation and affordable housing sectors, among others.
The government is now working on innovative steps to support these initiatives to meet the investment needs of the infrastructure sector.