Announcing the General Budget 2011-12 here today, Shri Pranab Mukherjee, Finance Minister, proposed an allocation of Rs.2,14,000 crore for infrastructure sector, which is 23.3% higher than current year. This amounts to 48.5% of the Gross Budgetary support to plan expenditure.

The Finance Minister, stated that in order to give a boost to infrastructure development in railways, ports, housing and highways development, it has been proposed to allow tax-free bonds of Rs.30,000 crore to be issued by various government undertakings in the year 2011-12. This includes Indian Railway Finance Corporation Rs.10,000 crore; National Highway Authority of India Rs.10,000 crore; HUDCO Rs.5000 crore and Ports Rs.5000 crore.

Shri Mukherjee informed that India Infrastructure Finance Company Limited (IIFCL) is expected to achieve a cumulative disbursement of Rs.25,000 crore by March 31, 2012. Under the “take out financing scheme”, seven projects have been sanctioned with a debt of Rs.1500 crore. Another Rs.5000 crore will be sanctioned during 2011-12, he informed.

Tax-free infrastructure bonds expand funding for government undertakings and support project financing and disbursement targets. The Budget channels a substantial portion of plan support to infrastructure and authorises issuance of tax-free bonds by government undertakings to mobilise long-term project finance. A government financing intermediary is assigned a cumulative disbursement target and operates a take-out financing scheme with specified project sanctions and further sanctioning planned, combining bond issuance with intermediary refinancing to advance infrastructure projects.