Finance minister Arun Jaitley is expected to unveil innovative funding models for the infrastructure sector, including extension of tax incentives to various categories of existing bonds and new sector-specific bonds, in the upcoming budget.
The move aims to address the massive funding needs of core sectors such as renewable energy, roads and highways and power.
The government has been nudging banks and lenders to provide more finance for the development of the infrastructure sector, especially renewable energy, for which the government has received commitments worth $300 billion (Rs 18 lakh crore).
For roads and highways, the Centre is mulling to shift the excise allocation to the “cess” category, af which, it would become mandatory for the government to spend money only on roads and highways.
To channelise easier loans, power and infrastructure are also likely to be classified as priority sectors in the upcoming budget. This means banks will lend to companies in those sectors at lower interest rate. Banks are currently wary of lending to the power sector due to rising cases of non-performing assets (NPAs) — loans that do not yield returns.
The new sector-specific bonds will look at raising cheaper funds from overseas markets and provide a window catering to the risk involved such as delayed returns, long tenures etc.
{{/usCountry}}The new sector-specific bonds will look at raising cheaper funds from overseas markets and provide a window catering to the risk involved such as delayed returns, long tenures etc.
{{/usCountry}}Yes Bank recently floated India’s maiden green infrastructure bond issue with a 10-year tenure, for which it received commitments of Rs 1,000 crore against a targeted Rs 500 crore.