Infra bonds may stage a come back in FY17 Budget

With infrastructure and smart cities being the focus areas, the government may reintroduce infrastructure bonds in the Budget, this year.

Meant for channelising domestic savings into the infrastructure sector, the bonds were introduced in Budget 2010. They provided a separate deduction up to Rs 20,000 from one’s taxable income, if the amount was invested in infrastructure bonds. However, the scheme was discontinued two years after remaining in force.

Official sources said that the government is keen on bringing them back, given the huge need for funding the long gestation projects in the sector. They said, the focus on developing smart cities has necessitated a rethink on these bonds. The government has recently released a list of 20 cities to be developed as smart cities at the cost of over Rs 50,000 crore.

Prime Minister Narendra Modi had reiterated to spend more on increasing the road and highway network.

“In 2013-14, the total number of National Highway kilometres awarded was about 3,500 km. This more than doubled in the first year of this government, to nearly 8,000 kilometres, an all-time high. This year, we are planning to award 10,000 km,” Modi said.

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