In a move to boost the infrastructure development in the country, the Department of Economic Affairs (DEA) Secretary Arvind Mayaram has said that the government is working on various steps, including deepening of the bond market and setting up of a fund, to promote debt and equity investment in the infrastructure sector. By adding further, mayaram said that on equity front, the government will come up with Infrastructure Trust Fund (ITF) within two months, while, on debt side the government is making efforts to develop the corporate bond market and encourage Employees Provident Fund Organisation (EPFO) to invest in infrastructure projects. In the coming month there will be greater deepening of the equity and bond markets for financing the country’s infrastructure sector, he added.
Referring to Infrastructure Trust Fund (ITF), Mayaram said under the ITF structure underlying revenue of a project will be transferred to a trust which will issue units to investors, including foreign investors who want to buy the units. DEA Secretary also expressed the need to encourage overseas pension funds and sovereign wealth funds (SWFs) to make investment in infrastructure projects and once they make investment, Indian investors would also follow suit. On Infrastructure Debt Fund (IDF), Mayarm added that the government is working with the Reserve Bank to make an appropriate shift towards Infrastructure Debt Fund (IDF) under which loans given by banks would not be treated as restructuring of debt. Under IDFs framework, the interest rate should come down as the construction risk has already been borne by the banks. Further, he added that the term of IDFs should be stretched for 15-20 years to attract long-term pension funds or sovereign wealth funds.
The government has identified the development of infrastructure a most critical prerequisite to boost the economy’s growth. For the 12th Five Year Plan (2012-17), the government has set the $1-trillion investment target for the infrastructure sector.
Referring to Infrastructure Trust Fund (ITF), Mayaram said under the ITF structure underlying revenue of a project will be transferred to a trust which will issue units to investors, including foreign investors who want to buy the units. DEA Secretary also expressed the need to encourage overseas pension funds and sovereign wealth funds (SWFs) to make investment in infrastructure projects and once they make investment, Indian investors would also follow suit. On Infrastructure Debt Fund (IDF), Mayarm added that the government is working with the Reserve Bank to make an appropriate shift towards Infrastructure Debt Fund (IDF) under which loans given by banks would not be treated as restructuring of debt. Under IDFs framework, the interest rate should come down as the construction risk has already been borne by the banks. Further, he added that the term of IDFs should be stretched for 15-20 years to attract long-term pension funds or sovereign wealth funds.
The government has identified the development of infrastructure a most critical prerequisite to boost the economy’s growth. For the 12th Five Year Plan (2012-17), the government has set the $1-trillion investment target for the infrastructure sector.
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