India to set up vibrant bond market: Mukherjee

January 19th, 2011 - 9:32 pm ICT by IANS  

Pranab Mukherjee New Delhi, Jan 19 (IANS) India plans to develop a vibrant bond market to facilitate infrastructure financing, as the source of nearly one-third of the targeted $1 trillion investment in the sector during the 12th plan period is not known yet, Finance Minister Pranab Mukherjee said Wednesday. “We want to develop and set up a vibrant bond market in the country to facilitate infrastructure financing,” Mukherjee said after launching the British-India Infrastructure Group here.

As per the existing regulations, Indian companies can issue bonds in Indian currency, which gets traded on the corporate bond market in the country.

Foreign institutional investors can invest in these bonds up to $20 billion collectively, with a “carve out” of $5 billion for infrastructure projects solely.

The finance minister said the government was considering creating a regulatory framework for credit enhancement. “Various options with regard to creation of infrastructure debt fund are being examined by the Ministry of Finance,” he said.

Mukherjee said nearly half of the targeted $1 trillion investment in infrastructure sector during the 12th plan period (fiscal 2012-17) is envisaged to be financed through private sources.

“Public Private Partnership (PPP), wherein the private sector is participating in the construction and operation of public infrastructure asset, is one of the most important development in infrastructure delivery in our country,” he said.

He urged foreign firms, especially British companies, to increase investments in India’s infrastructure sector.

Addressing the newly constituted British-India Infrastructure Group, Secretary of State for Business, Innovation and Skills Vince Cable said several UK companies were interested to invest in India’s infrastructure sector.

Cable said the British-India Infrastructure Group would facilitate the flow of investment between the two countries.

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