Bond market expects govt to allow huge tax-free bond issuances

It expects the Centre to allow public sector undertakings to raise huge amount of tax-free bonds

With bond yields falling to multi-year lows, a section of the bond market says it could be time the government enables in the budget state-owned infrastructure and infra finance companies to raise enormous amounts of tax-free bonds.
 

The government doesn’t raise tax-free bonds directly. It instead allows state-owned institutions to raise these bonds. The bonds raised by these companies are over and above the government’s borrowings. The government is committed to borrow within a particular limit. For 2016-17, the borrowing was limited to 3.5 per cent of the gross domestic product, which was later reduced by Rs 18,000 crore in