In order to aid the deepening of the corporate bond market in India, a slew of measures have been announced in the Budget, a prominent one being a dedicated fund to be set up by the Life Insurance Corporation of India (LIC) to provide credit enhancement to infrastructure projects.
The fund will help in raising the credit rating of bonds floated by infrastructure companies and facilitate investment from long-term investors.
It has also been proposed that any gains arising over appreciation of rupee against a foreign currency at the time of redemption of rupee-denominated bonds of an Indian company subscribed by a non-resident shall be exempt from capital gains tax.
In order to give a boost to the gold monetisation sche-me, the Budget has proposed an exemption on the capital gains tax on redemption of sovereign gold bonds by an individual.
The Budget also indicated that the Reserve Bank of India will issue guidelines to encourage large borrowers to access a certain portion of their financing needs through market mechanism instead of the banks.
The finance minister has also proposed an allocation of `55,000 crore in the Budget for roads and highways, which, he indicated, will be further topped up by an additional `15,000 crore to be raised by NHAI through bonds.
To augment infrastructure spending further, the government will permit mobilisation of additional finances to the extent of Rs 31,300 crore by NHAI, PFC, REC, IREDA, NABARD and Inland Water Authority through bonds during 2016-17.
Furthermore, investment basket of foreign portfolio investors will be expanded to include unlisted debt securities and pass through securities issued by securitisation of SPVs. Some of the other measures include the introduction of an electronic auction platform by SEBI for primary debt offer in order to develop an enabling ecosystem for the private placement market in corporate bonds.