‘Permit banks to float infrastructure bonds’

February 24th, 2008 - 4:55 pm ICT by admin  

By Quaid Najmi
Mumbai, Feb 24 (IANS) With infrastructure development gaining momentum in the country, Indian banks should be permitted to float infrastructure bonds with special tax treaty, according to P.L. Ahuja, managing director and chief executive officer, Bank of Rajasthan. Speaking to IANS, Ahuja expressed the hope that the union budget 2008-09 would initiate steps in this direction. This year’s budget holds the key for the growth of the Indian economy that has speeded up over the past few years, he said.

“Indian banks may also be allowed to float such bonds to generate enough resources for placing it in public and public infrastructure development programmes,” Ahuja said.

He added that the gross domestic product (GDP) growth of 8 to 9 percent over the past two years was the result of such development and if this growth momentum is to be maintained, higher spending on infrastructure development should be given top priority.

On the infrastructure front, power sector and the interconnection of rural areas by road/rail/aviation should be attended to, he said.

Focus should be on improving financing options for infrastructure development by a possible inclusion of infrastructure into the priority sectors, he urged.

The financial sector will play an important role in such development and hence the budget is expected to favour the sector in general and the banking industry in particular.

Ahuja pointed out that higher spending on education and employment generation would help create better environment to fasten the pace of economic development. Export oriented industry too needs to be given some relief in the wake of hardening rupee.

Referring to the government’s assurance towards social economy enlistment programmes, Ahuja suggested that removal of the upper cap, de-linking ceiling on pension, gratuity, leave encashment on the lines of superannuation across the board would be of great help.

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