The infrastructure sector, which has been under severe stress over the last two years, got some fillip in the Union Budget announced by finance minister P Chidambaram on Thursday.
Encouragement to infrastructure debt funds (IDFs) with a view to revive investments in the sector has been hailed by the industry. The minister has also raised the limit of tax-free bonds that help raise capital for some companies from R25,000 crore to R50,000 crore for 2013-14.
?Financing for infrastructure projects would be eased through enhanced liquidity from IDF, IIFCL and housing loan deduction. Increased planned expenditure in education and healthcare will translate into higher development projects in these sectors. Investment allowance of 15% for projects of R100 crore will certainly promote infrastructure growth,? said Hemal Zobalia, partner (tax), KPMG India.
Chidambaram also said that companies investing R100 crore or more in plant and machinery between April 2013 and March 2015 will be allowed to deduct an investment allowance of 15% of the investment, in addition to current rates of depreciation. He also said that 47% of the announced allocation of $1 trillion or R55 lakh crore in infrastructure sector in the 12th Plan will come from the private sector.
?There are several other positives for the infrastructure sector. Enhanced corpus for MGNREGS, PMGSY, RIDF, Indira Awaas Yojana along with increased funds for Nabard so that refinancing can be extended to projects pertaining to warehousing, cold storage, etc, will go a long way in addressing the supply bottlenecks that have been fuelling food inflation,? says Hemant Kanoria, chairman and managing director, Srei Infrastructure Finance.