Budget 2015: Infra gets Rs 70,000 cr more; tax-free bonds to end funds crunch

Continuing with prime minister Narendra Modi’s thrust on infrastructure, the first full budget of the NDA government has proposed a slew of steps to the investment in the crucial sector that has the potential to revive the economy meaningfully.

First and foremost the government proposes to increase the investment in the sector by Rs 70,000 crore in the next financial year, with outlays for the roads and the gross budgetary support to the railways increasing by Rs 14,031 crore, and Rs 10,050 crore, respectively, the finance minister said in his Budget speech today.

In order to end the funds drought for the sector, the government will establish a National Investment and Infrastructure Fund (NIIF), and find monies to ensure an annual flow of Rs 20,000 crore to it.

“This will enable the Trust to raise debt, and in turn, invest as equity, in infrastructure finance companies such as the IRFC and NHB. The infrastructure finance companies can then leverage this extra equity, many fold,” Jaitley said in his speech.

As another step that will help increase the fund flow into the sector, the government will also permit tax-free infrastructure bonds for the projects in the rail, road and irrigation sectors.

He also promised to revisit the the public-private partnership (PPP) mode of infrastructure development to rebalance the risk.

“In infrastructure projects, the sovereign will have to bear a major part of the risk without, of course, absorbing it entirely,” the finance minister said.

An Atal Innovation Mission (AIM) will also be set up, involving academics, entrepreneurs, and researchers who will draw upon national and international experiences to foster a culture of innovation, R&D and scientific research in India.