JOIN USGiving much needed push to the infrastructure sector in the Union Budget, Finance Minister Pranab Mukherjee on Friday announced slew of proposals to allow financial institutions and others to raise about Rs 60,000 crore from tax free bonds in 2012-2013.
“Lack of adequate infrastructure is a major constraint on our growth. The strategy we have followed so far is to increase investment ... For the year 2011-12, tax free bonds for Rs 30,000 crore were announced for financing infrastructure projects. I propose to double it to raise Rs 60,000 crore,” Mukherjee said while tabling the Budget in Parliament.
These include Rs 10,000 crore each for NHAI, IRFC, IIFCL and power sector, besides Rs 5,000 crore each for HUDCO, National Housing Bank, SIDBI and ports.
The finance minister said investment in the sector during the 12th Five-Year Plan (2012-17) will go up to Rs 50 lakh crore, about half of which is expected from the private sector. The government wanted the active private sector participation in the sector though Public Private Participation (PPP).
To encourage PPP in road construction projects, he announced allowing external commercial borrowings (ECB) for capital expenditure on the maintenance and operations of toll systems for highways.
The Finance Minister also announced number of steps including customs duty exemption on imported fuel and lower levy on overseas funds for projects to provide relief to crisis-hit power sector.
Permitting power companies to tap External Commercial Borrowing (ECB) route to part re-finance rupee debt on power plants and increasing power sector's tax-free bonds limit to Rs 10,000 crore from Rs 5,000 crore are also among the Budget proposals.
“Producers of thermal power have been under stress because of high prices of coal.
I propose to ease the situation by providing full exemption from basic customs duty and a concessional countervailing duty of one per cent to steam coal for a period of two years till March 31, 2014,” Mukherjee said. At present, imported coal attracts a customs levy of around five per cent. Full basic duty exemptions would be extended to power plant fuels such as natural gas and Liquified Natural Gas (LNG), uranium concentrate, sintered uranium dioxide in natural and pellet form.
In a move that would reduce overall debt cost, withholding tax on ECB would be cut to five per cent from 20 per cent for three years.