Introduction of long-term debt markets to finance infrastructure projects, allowing infrastructure companies to get external commercial borrowings (ECBs), more budgetary allocation for the infrastructure sector and complete duty waiver on imports of construction equipment are some of the things that private players wish for in the Budget 2008-09.
?The Indian infrastructure sector is at an inflection point with immense opportunity for private participation. As the government announces large scale, complex infrastructure projects, the problem of funding becomes acute. The government should consider introducing mechanisms/ instruments that allow long-term funding of projects. To begin with, the external commercial borrowings (ECB) curb should be lifted,? Ankineedu Maganti, director, Soma Enterprise Ltd said.
Furthermore, Maganti also hoped that the Budget would do away with the ambiguity in the applicability of service tax in several sectors of infrastructure.
Director, Simplex Infrastructures Ltd, Amitabh Mundhra and Maganti voiced a similar demand when they said that to sustain the growth in the construction sector, import duty on construction equipment should be abolished. This would give the necessary fillip to the construction activities for mega infrastructure projects.
Maganti wants duties on materials such as bitumen, steel and cement removed, especially in PPP projects. Meanwhile, Mundhra hoped that the government would live up to its declared focus on infrastructure sector and the budgetary allocation for the sector would be substantially increased.
?The budgetary allocations have never been enough for the sector. Hope this time it (allocation) gets better and the funds are properly utilised and projects implemented,? Mundhra said.
Investment requirement for infrastructure projects in the Eleventh Plan has been projected at Rs 20,18,709 crore ($492 billion). This is 2.45 times the amount of Rs 8,22,193 crore invested in the Tenth Plan.
In the current Plan, it has been estimated that the public and private sectors would require a debt component of Rs 9,85,702 crore ($240bn).
Total availability of debt funds to finance infra projects is estimated at Rs 8,25,539 crore ($201bn) which leaves a gap of Rs 1,60,164 crore ($39bn).