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NHAI to raise Rs14K cr by year end

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by Staff Writer
NHAI to raise Rs14K cr by year end

State-owned National Highway Authority of India’s (NHAI) and PFC will raise over Rs14,000 crore by way of infrastructure bond issues by December 15, according to sources in the finance ministry.
NHAI will raise Rs10,000 crore and PFC will raise Rs4,100 crore, respectively. The infra bond issues are likely by December 15. According to sources, the Railway Finance Corporation has also got clearance to raise Rs10,000 crore through infra bonds, but it will come out with the issue after assessing demand for the NHAI papers.
With a view to attracting long-term investments for the infrastructure sector, the government has allowed NHAI, Railway Finance Corporation, HUDCO and ports to raise Rs30,000 crore through tax-free bonds in the current fiscal. Railway Finance Corporation will take final decision on issuing infra bond after seeing response of NHAI and PFC. The next meeting on infra bond will be held on December 25. Earlier, Railway Finance Corporation had said they had received finance ministry clearance to issue tax-free bonds to raise around Rs10,000 crore to tide over the funds crunch.
While the NHAI’s bond would be tax free, subscribers of the one issued by Power Finance Company (PFC) would get tax exemptions on investments up to Rs20,000. To channelise savings for development of infrastructure sector, the government in 2010-11 introduced the concept of long-term tax savings bond. It provides tax exemption on investments up to Rs 20,000 in long-term infrastructure bonds. This is over and above the existing tax saving limit of Rs 1 lakh.
Infrastructure bonds should be of 10 years with a minimum lock-in of 5 years. After the expiry of five years, the investors would have the option to either sell it in secondary market or seek redemption. The government proposes to double investment in infrastructure to USD 1 trillion during the 12th Five Year Plan (2012-17). A host of companies like IFCI, REC and IDFC had raised about Rs 8,000 crore through issue of tax-savings infra bonds in the last fiscal.