Govt. to channelize foreign savings through debt funds

By SiliconIndia   |   Thursday, 29 July 2010, 09:18 Hrs   |    2 Comments
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Govt. to channelize foreign savings through debt funds
New Delhi: The government has urged the financial regulators to set up debt funds to channelize foreign savings into country's infrastructure. This is done with a motive to address inadequate funding for this crucial sector that might disrupt the economic progress of India. Private sector entities will now be able to tap into long term foreign resources like pension and insurance funds as they are now allowed to set up such funds.

The biggest constraint in achieving nine percent growth is the availability of physical infrastructure which needs over $1 trillion of funds over the 12th plan period. The government is already in talks with SEBI and RBI on the regulatory framework and functioning of such funds. "The infrastructure funds being contemplated are in a framework that will bring incrementality to the sources of capital that are financing Indian infrastructure," said Vikram Limaye, Executive Director, IDFC.

In order to increase the flow of private resources to this sector, the government is considering multiple options by setting up funding agencies like IIFCL and has issued guidelines for tax free infrastructure bonds to eye on the household savings.

SEBI will also have to create regulatory framework for registering these funds on the lines of venture capital funds.

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