Reiterating the government’s focus on providing an impetus to the infrastructure sector, finance minister Pranab Mukherjee on Friday doubled the amount to be raised through tax-free bonds to Rs 60,000 crore for 2012-13.
He also widened the ambit of the viability gap funding (VGF) to a host of other sectors. VGF is provided to make public-private partnership projects viable. “I propose to double the amount to be raised through tax-free infrastructure bonds to Rs 60,000 cr in 2012-13. This includes Rs 10,000 cr for NHAI (National Highways Authority of India), Rs 10,000 cr for IRFC (Indian Railway Finance Corporation), Rs 10,000 cr for IIFCL (India Infrastructure Finance Co Ltd), Rs 5,000 cr for Hudco, Rs 5,000 cr for National Housing Bank, Rs 5,000 crore for SIDBI, Rs 5,000 cr for ports and Rs 10,000 cr for the power sector,” he said.
Irrigation, terminal markets, common infrastructure in agriculture markets, soil testing laboratories and capital investment in the fertiliser sector will be eligible for VGF under this scheme, he said. “Oil and gas/LNG storage facilities and oil and gas pipelines, fixed network for telecommunication and telecommunication towers will also be made eligible sectors for VGF.”
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Mukherjee announced that infrastructure investment will go up to Rs 50 lakh crore during the 12th Plan and about half of this is expected to come from the private sector. Lauding the performance of the ministry of road transport and highways, he said allocation for the ministry will be increased by 14 per cent to Rs 25,360 crore in 2012-13.
He also proposed covering 8,800 km under the National Highways Development Programme next year. The ministry is set to achieve its target of awarding projects covering 7,300 km during 2011-12. This would be 44 per cent higher than the best-ever length of 5,082 km awarded in 2010-11.
Vishwas Udgirkar, senior director, Deloitte, in India, said: “The minister has focused on getting private money to the sector, strengthening the implementation and also provided more avenues of raising funds with measures such as relaxing external commercial borrowings’ guidelines. All this will provide an impetus to the sector.”
Recapitalisation of banks will also make them cash-rich and help in funding the infrastructure projects, he added.
Analysts say the Budget reiterates that the government expects a major part of the fund for infrastructure development to come from the private sector.
