Media reports indicate that the finance ministry allowed sovereign wealth funds to invest in debt instruments floated by state-run companies.
It may be noted that the government allowed 13 state-run firms to raise around Rs 48,000 crore by selling tax- free bonds in 2013-14. The fund would be used for infrastructure such as roads, ports and power plants.
Government allowed India Infrastructure Finance Co and Indian Railway Finance Corp. to raise around Rs 10,000 crore through tax-free bonds in 2013-14.
Similarly, Housing & Urban Development Corp., Rural Electrification Corp., Power Finance Corp. and National Highways Authority of India were allowed to raise Rs 5,000 crore each.
Ennore Port and Airports Authority of India can issue up to Rs 500 crore each of tax-free notes, and Cochin Shipyard can offer as much as Rs 250 crore.
Allowing these firms to issue tax-free bonds is one of the ways the government adopted to meet $1 trillion infrastructure investment target by 2017.
Because these bonds will be issued by government- supported institutions, theyÂ’ll be considered as good as sovereign bonds and sovereign wealth funds may find them an attractive proposition, reports indicate.
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