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Infrastructure
We are positive on certain elements of the budget proposal:
A 23% increase in allocation to infrastructure-related programmes;
Provisions should create a favourable environment for the infrastructure corporate
debt fund
Measures
Overall allocation to the infrastructure sector increased to INR2.14t (48.5% of total
allocations), a 23.3% increase over last year.
Financing
FII limit for investment in infrastructure corporate bonds with residual maturity of
over five years has been increased to USD25b, from USD5b. Additionally, direct
investment into unlisted infrastructure special purpose vehicles (SPVs) with a
minimum lock-in period of three years has been permitted. FIIs will be allowed to
trade among themselves during the lock-in period.
India Infrastructure Finance Company (IIFL) has been set a target of cumulative
disbursement of INR200b by 31 March 2011 and INR250b by 31 March 2012.
Additionally, INR50b will be sanctioned under the take-out financing scheme in
FY12, compared to INR15b in FY11.
Tax free bonds of INR300b have been allowed: Indian Railway Finance
Corporation (INR100b), National Highway Authority of India (INR100b), HUDCO
(INR50b) and Ports (INR50b).
The corpus of the Rural Infrastructure Development Fund (RIDF) has been
increased to INR180b, from INR160b.
In 2011-12, Delhi Metro Phase-III and Mumbai Metro Line III are proposed to be
taken up. The ongoing Metro projects of Bengaluru, Kolkata and Chennai will be
provided financial assistance for speedy implementation.
Special debt funds to cater infrastructure financing will be set up and the income
from those funds will be exempt from income tax for residents (non-residents to be
taxed at 5%).
For FY12, allocation to Bharat Nirman has been increased by INR100b to
INR580b. Bharat Nirman includes Pradhan Mantri Gram Sadak Yojna (PMGSY),
Accelerated Irrigation Benefit Programme, Rajiv Gandhi Grameen Vidyutikaran
Yojna, Indira Awas Yojna, National Rural Drinking Water Programme and Rural
telephony.
Direct and indirect taxes
Minimum Alternate Tax (MAT) has been increased from 18% to 18.5%. Surcharge
on income tax for domestic companies has been reduced to 5%, from 7.5%.
Additionally, developers of Special Economic Zones (SEZs) and units operating in
SEZs have been brought in the ambit of MAT.
Deduction under 80CCF up to INR20,000 for investment in infrastructure funds has
been extended to FY12.
Duty on micro-irrigation equipment has been reduced from 7.5% to 5%.
Excise duty on indigenous equipment supplied for the expansion of existing mega
or ultra mega power projects has been removed.
Bio-based asphalt and specified machinery for its application in the construction of
national highways and tunnel-boring machines required for the construction of
highways have been excluded from basic customs duty.
What more could have been done?
Infrastructure annuity fund for rural development;
Channelise pension and insurance funds to infrastructure sector; and
Establish a National Land Bank Corporation, with a basic corpus, to solve land
acquisition issues
Top pick: IRB Infrastructure
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Infrastructure
We are positive on certain elements of the budget proposal:
A 23% increase in allocation to infrastructure-related programmes;
Provisions should create a favourable environment for the infrastructure corporate
debt fund
Measures
Overall allocation to the infrastructure sector increased to INR2.14t (48.5% of total
allocations), a 23.3% increase over last year.
Financing
FII limit for investment in infrastructure corporate bonds with residual maturity of
over five years has been increased to USD25b, from USD5b. Additionally, direct
investment into unlisted infrastructure special purpose vehicles (SPVs) with a
minimum lock-in period of three years has been permitted. FIIs will be allowed to
trade among themselves during the lock-in period.
India Infrastructure Finance Company (IIFL) has been set a target of cumulative
disbursement of INR200b by 31 March 2011 and INR250b by 31 March 2012.
Additionally, INR50b will be sanctioned under the take-out financing scheme in
FY12, compared to INR15b in FY11.
Tax free bonds of INR300b have been allowed: Indian Railway Finance
Corporation (INR100b), National Highway Authority of India (INR100b), HUDCO
(INR50b) and Ports (INR50b).
The corpus of the Rural Infrastructure Development Fund (RIDF) has been
increased to INR180b, from INR160b.
In 2011-12, Delhi Metro Phase-III and Mumbai Metro Line III are proposed to be
taken up. The ongoing Metro projects of Bengaluru, Kolkata and Chennai will be
provided financial assistance for speedy implementation.
Special debt funds to cater infrastructure financing will be set up and the income
from those funds will be exempt from income tax for residents (non-residents to be
taxed at 5%).
For FY12, allocation to Bharat Nirman has been increased by INR100b to
INR580b. Bharat Nirman includes Pradhan Mantri Gram Sadak Yojna (PMGSY),
Accelerated Irrigation Benefit Programme, Rajiv Gandhi Grameen Vidyutikaran
Yojna, Indira Awas Yojna, National Rural Drinking Water Programme and Rural
telephony.
Direct and indirect taxes
Minimum Alternate Tax (MAT) has been increased from 18% to 18.5%. Surcharge
on income tax for domestic companies has been reduced to 5%, from 7.5%.
Additionally, developers of Special Economic Zones (SEZs) and units operating in
SEZs have been brought in the ambit of MAT.
Deduction under 80CCF up to INR20,000 for investment in infrastructure funds has
been extended to FY12.
Duty on micro-irrigation equipment has been reduced from 7.5% to 5%.
Excise duty on indigenous equipment supplied for the expansion of existing mega
or ultra mega power projects has been removed.
Bio-based asphalt and specified machinery for its application in the construction of
national highways and tunnel-boring machines required for the construction of
highways have been excluded from basic customs duty.
What more could have been done?
Infrastructure annuity fund for rural development;
Channelise pension and insurance funds to infrastructure sector; and
Establish a National Land Bank Corporation, with a basic corpus, to solve land
acquisition issues
Top pick: IRB Infrastructure
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