Press Information Bureau

Government of India

Ministry of Finance

16-March-2012 14:04 IST

Rs. 50 Lakh Crore Allocated to Infrastructure in Twelfth Plan; 50% Expected from Private Sector

Tax Free Bonds for Financing Infrastructure Doubled to Rs. 60,000 Crore More Sectors Eligible for Viability Gap Funding

While presenting the Union Budget 2012-13 here today in LokSabha, ShriPranab Mukherjee, Finance Minister proposed allocation of Rs. 50 lakh crore towards infrastructure investment during the Twelfth Plan period. About half of this is expected to come from the private sector, he stated.

As part of the General Budget, the Finance Minister doubled the tax free bonds for financing infrastructure projects to Rs. 60,000 crore. The tax free bonds for 2011-12 were for Rs. 30,000 crore. During 2012-13, the tax free bonds include Rs. 10,000 croreeach for NHAI, IRFC, IIFCL and power sector, and Rs. 5,000 croreeach for HUDCO, National Housing Bank, SIDBI, and ports.

The Finance Minister announced inclusion of more sectors in the list of sectors eligible for Viability Gap Funding (VGF) under the scheme for support to Public Private Partnership (PPP) in infrastructure. These sectors are irrigation (including dams, channels and embankments), terminal markets, common infrastructure in agriculture markets, soil testing laboratories and capital investment in fertilizer. Furthermore, oil and gas/LNG storage facilities, oil and gas pipelines, fixed network for telecommunication and telecommunication towers are also made eligible sectors for VGF.

Shri Mukherjee announced that a harmonized master list of infrastructure has been approved by the Government. This will help in removing ambiguity in the policy and regulatory domain and encourage investment in the infrastructure sector, he stated.

In order to provide ease of access of credit to infrastructure projects, India Infrastructure Finance Company Limited (IIFCL) has set up a structure for credit enhancement and take-out finance. Towards the same aim, a consortium for direct lending and grant of in-principle approval to infrastructure developers before bid submission for PPP projects has also been created.

DSM/MV/LMP/18

Tax-free infrastructure bonds expanded to increase private financing and broaden viability gap funding eligibility across additional sectors. The budget doubles the ceiling for tax-free bonds to mobilise long-term debt through central financing institutions for infrastructure and adopts a harmonized master list to reduce policy ambiguity. Eligibility for Viability Gap Funding under the PPP support scheme is broadened to include irrigation, agricultural market infrastructure, fertilizer capital investment, oil and gas storage and pipelines, and fixed telecommunication networks and towers. Credit access measures include IIFCL's credit enhancement and take-out finance, a consortium for direct lending, and in-principle approvals to developers before PPP bid submission to improve project bankability.