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Govt to further liberalise FDI policy: Pranab

$1 trillion required during 12th Plan period for infrastructure development.

Written by ENS Economic Bureau | New Delhi | Published: March 5, 2011 1:26:42 am

The government today said it is looking at further liberalisation of foreign direct investment policy for bringing in more investment in the infrastructure sector.

As per the government’s estimate,the country would require $1 trillion during the 12th Plan period for its infrastructure requirements. The government is keen to leverage private investment to fund infrastructure needs.

“Discussions are underway to also liberalize the FDI policy (for the infrastructure sector),” finance minister Pranab Mukherjee told reporters here.

He said the FII investment limits in corporate bonds have been liberalised and special vehicles in the form of notified infrastructure debt funds with certain tax concessions have been announced to improve the flow of resources to this sector.

“Our experience with Public Private Partnership model for infrastructure development in the country has been good. It is our intention to come up with a comprehensive policy that can be used by the Centre and State Governments in improving the resource flows to the sector,” he said.

In his Budget 2011-12,Mukherjee had announced that the FII limit for investment in corporate bonds,with residual maturity of over five years issued by companies in infrastructure sector,will be raised by an additional limit of $20 billion,taking the limit to $25 billion.

This would help in mobilising more funds for the infrastructure sector. He had added that for 2011-12,an allocation of over Rs 2,14,000 crore has been made for the sector,a rise of 23.3 per cent compared to 2010-11.

“This amounts to 48.5 per cent of the Gross Budgetary Support to plan expenditure,”

As regard the global economic situation,Mukherjee said that volatility in capital inflows and hardening of commodity prices is a source of worry for major emerging markets,including India.

“The major emerging market economies are experiencing robust growth,though volatility in capital inflows and inflation,including from the hardening of global commodity prices,is a source of worry,he said.

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