Doing Business in India to be Made Easy and Mutually Beneficial

12th Plan Projects Investment of Rs 55,00,000 Crore in Infrastructure

While presenting the Budget for 2013-14 , the Finance Minister , Shri P. Chidambaram Said that the growth rate of an economy is correlated with the investment rate. The key to restart the growth engine is to attract more investment, both from domestic investors and foreign investors. He said that efforts will be made to improve communication of the country’s policies to remove any apprehension or distrust in the minds of investors, including fears about undue regulatory burden or application of tax laws. ‘Doing business in India’ must be seen as easy, friendly and mutually beneficial.

While every sector can absorb new investment, it is the infrastructure sector that needs large volumes of investment. The 12th Plan projects an investments of USD 1 trillion or Rs. 55,00,000 crore in infrastructure. The Plan envisages that the private sector will share 47 percent of the investment. Besides, India needs new and innovative instruments to mobilize funds for this order of investment. Government has taken or will take the following measures to increase investment in infrastructure:

Infrastructure Debt Funds (IDF) will be encouraged. These funds will raise resources and, through take-out finance, credit enhancement and other innovative means, provide long-term low-cost debt for infrastructure projects. Four IDFs have been registered with SEBI so far and two of them were launched in the month of February, 2013.

India Infrastructure Finance Corporation Ltd (IICL), in partnership with the Asian Development Bank, will offer credit enhancement to infrastructure companies that wish to access the bond market to tap long term funds.

In the last two years, a number of institutions were allowed to issue tax free bonds. They raised Rs. 30,000 crore in 2011-12 and are expected to raise about Rs. 25,000 crore in 2012-13. It is proposed to allow some institutions to issue tax free bonds in 2013-14, strictly based on need and capacity to raise money in the market, upto a total sum of Rs. 50,000 crore.

Multilateral Development Banks are keen to assist in efforts to promote regional connectivity. Combining the ‘Look East’ policy and the interests of the North Eastern States, it is proposed to seek the assistance of the World Bank and the Asian Development Bank to build roads in the North Eastern States and connect them to Myanmar.

NABARD operates the Rural Infrastructure Development Fund (RIDF). RIDF has successfully utilized 18 tranches so far. It is proposed to raise the corpus of RIDF-XIX in 2013-14 to Rs.20,000 crore.

Pursuant to the announcement made last year, a sum of Rs. 5000 crore will be made available to NABARD to finance construction of warehouses, godowns, silos and cold storage units designed to store units designed to store agricultural produce, both in the public and the private sectors. This window will also finance, through the State Governments, construction of godowns by panchayats to enable farmers to store their produce, Shri Chidambaran announced.