'India for innovative tools to finance infrastructure'

New Delhi, Oct 8: To finance its infrastructure requirements of about 14 lakh crore, India needs innovative instruments for raising capital such as pension, provident fund, insurance, mutual fund in addition to the removal of policy roadblocks.

This was suggested by the Federation of Indian Chambers of Commerce and Industry (FICCI) to beef up Indian infrastructure as the capital requirement could not be matched up even by raising it through debt or equity.

''There is an urgent need to develop the corporate bond market in India to finance infrastructure growth. At the same time, government could also provide some comforts like exit options for the initial lenders and increase the viability gap funding,'' the industry body said.

Securitisation, it pointed out, is another financial instrument, which has been successful in financing infrastructure projects in various developed countries.

''In those countries, one of the most common forms of financing has been non-recourse (or limited recourse) financing. This means that the income used to repay creditors comes entirely (or primarily) out of the revenues generated by the project itself,'' it said.

FICCI also suggested that Highway Bonds with a maturity period of 15-20 years can be used for financing non-commercial sections of the global quadrilateral. Commercial banks, insurance companies, provident funds, finance companies, and debt funds could subscribe such bonds.

Further, the federation said, model concession agreement for public private partnership should include effective state support mechanism, timely environmental clearance, and control mechanism to prevent overloading of vehicles.

It also suggested that partnership in dedicated freight corridor and effective regulation of urban rail based transport system could expedite the speed of infrastructure development.

UNI