Finance ministry vetting infrastructure debt fund scheme: Montek

June 10th, 2011 - 9:33 pm ICT by IANS  

Pranab Mukherjee Bangalore, June 10 (IANS) The union finance ministry is examining a proposal to set up an infrastructure debt fund for financing infrastructure projects across the country during the 12th Five Year Plan (2012-17) period, Planning Commission Deputy Chairman Montek Singh Ahluwalia said Friday.

“The proposal on setting up the infrastructure debt fund is being examined by the finance ministry. Financing infrastructure projects being a constraint, we should make regulatory changes so that overseas investors can invest in the fund,” Ahluwalia told reporters on the margins of a meeting of the plan panel here.

With the government planning $1-trillion investments in infrastructure projects during the 12th Five Year Plan as against $500 billion during the 11th Plan (2007-12), Ahluwalia said the plan panel had framed guidelines for raising funds through debt instruments like bonds and other routes such as units in the capital markets.

“As financing huge infrastructure projects such as power plants, telecom, roads, highways, airports and seaports are complex, involving heavy capital infusion on a long-term basis, we have framed guidelines for setting up debt funds with a $10-billion target for the first fund during the first fiscal (2012-13) of the 12th Plan period,” Ahluwalia said.

Finance Minister Pranab Mukherjee had announced Feb 28 in the budget for this fiscal (2011-12) the setting up of debt funds through special purpose vehicles to attract foreign investments in the various infrastructure projects.

The policy framework will have guidelines for new private players and implementing the infrastructure projects in a time-bound manner so as to protect the interests of investors and ensure huge capital inflows through the foreign direct investment (FDI) route.

“We will begin with a target of rising $10-billion infrastructure debt fund in the next fiscal and follow it up with more such funds during the 12th Plan,” Ahluwalia pointed out after chairing the plan panel’s regional conference of the five southern states on the approach paper to the 12th Plan.

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