With this, the total money collected by the NHAI from the capital market during the current fiscal stands at a meagre Rs 656 crore. Though the second issue, which opened on February 16 and closed on March 24, was on tap since the NHAI had not set a target for the same, the collections have been less than desired. An authority official admitted that they expected better especially since their maiden issue was oversubcribed but considering the downtrend in the markets, Rs 156-crore collection was satisfactory.The seven-year bonds are exempted from long-term capital gains tax under Section 54 EC of the Income Tax Act.

The NHAI has planned to raise Rs 13,800 crore through market borrowings spread over the next four years to part-finance the Rs 58,000-crore National Highway Development Programme (NHDP). While Rs 3,600 crore will be raised during 2001-02, Rs 6,200 crore will be raised during 2002-03 with the remaining Rs 13,800 crore during the following fiscal. According to an NHAI official, the authority came out with the issue in order to gain experience of the capital market.

The second issue was privately placed with a coupon rate of 9.25 per cent payable annually as against a coupon of 10.5 per cent in the first issue. This issue has a seven-year tenor with a call and put option after three years. Finance Minister Yashwant Sinha had announced the introduction of Section 54EC in the Income Tax Act, replacing the earlier two Sections 54EA and 54EB.