Provides the base for long-term finance of infrastructure projects by leveraging private capital.
The Governments of India and the US have given their in-principle nod for a proposal by industry captains of both countries to set up a $10-billion fund to finance core-sector projects in India.
“The (India-US) CEO Forum proposed a $10 billion India-US infrastructure debt fund. It has been agreed in-principle that the Governments (of India and the US) will be fully supportive of the recommendation. The Finance Minister (Mr Pranab Mukherjee) and the US Treasury Secretary (Mr Timothy Geithner) are directly discussing what modalities should be adopted to put in place an infrastructure debt fund. The details are being worked out by them,” the Union Commerce and Industry Minister, Mr Anand Sharma, told reporters on the sidelines of a function organised by the CII.
Promising fund
Mr Sharma said the final figure of the fund can only be known once it is agreed between the two Governments. He said the fund will be exclusively for infrastructure projects, adding that, “Both the Governments and the businesses (of India and the US) will be involved in the fund. It is a public-private initiative.”
Mr Geithner said the idea of putting together an infrastructure fund was a very encouraging and useful development as it would not only provide the base for long term finance of infrastructure projects by leveraging private capital but also in some ways provide a bit of a catalyst for the broader development of the securities market and corporate finance market in India.
“In this (infrastructure debt) fund that the Finance Minister (Mr Mukherjee) and (Planning Commission Deputy Chairperson) Mr Montek Singh Ahluwalia are working on, I think, has a lot of promise, not just because of its specific benefits of the fund but as a way to help catalyse the type of regulatory changes that will allow the emergence of a broader and deeper capital market in India. It is a necessary part of India's growth strategy,” the US Treasury Secretary said.
Speaking at the CII function earlier, the Finance Minister, Mr Mukherjee, said India's fast growth has placed an increasing stress on its existing physical infrastructure such as electricity, railways, roads, ports, airports, irrigation, urban and rural water supply and sanitation, all of which suffer from a substantial capacity deficit.
$1-trillion Investment
India is looking at an investment of over $1 trillion in the core-sector in the 12th Five-Year Plan commencing April 1, 2012.
In the 11 th Plan (2007-08 to 2011-12), the investment requirement in infrastructure was around $514 billion, of which about 30 per cent was to be from the private sector. Mr Mukherjee said, in the 12 th Plan, the Government expects this contribution by the private sector to go up to 50 per cent, and, therefore, is encouraging public-private partnerships.
Mr Mukherjee invited American investments in India's infrastructure sector. “India presents exciting opportunity for global investors. The recovery of the benchmark market indices of India over the last two years has been quite rapid and supports this assessment,” he said.
He said foreign direct investment flows into India has been robust in the last couple of years, despite the trend of a fall in global capital flows. Read More
Source: The Hindu
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