Financial Daily from THE HINDU group of publications
Monday, Jul 05, 2004
Industry & Economy - Economic Offences
Turning black money into `light' ?
Mumbai , July 4
THE Indian power sector hopes to use "black" money for building infrastructure.
As part of their Budget 2004-05 wish list, lending institutions in the power sector have suggested that the Union Government issue power sector bonds aimed at those interested in converting black money into mainstream investments.
India has set itself a target of setting up 41,000 MW of generation capacity in the 10th Five Year Plan.
The sector will need close to $200 billion to meet targets set for generation, transmission and distribution businesses, according to Union Government estimates.
``We have written to the Finance Ministry that zero-coupon infrastructure bonds for the power sector be issued for raising money that would have otherwise been frittered away in the parallel economy,'' said a senior official of the Power Finance Corporation.
The organisations have requested the Government to provide concessions to the power sector on a "priority basis".
The institutions have asked that the Government introduce long tenure bonds that would allow investors to bring in money without disclosing its source.
``The bonds could be taxed on redemption. Also, any tax - 10 or 20 per cent - should be deducted at source. This way, the investor does not bear any inconvenience,'' said the official.
Although the details are still being worked out, power sector officials hope the Government will take up this proposal.
Institutional lenders to the power sector have been examining various avenues of raising finances to fund various upcoming public and private sector projects.
Since private sector investment is not coming in the power sector, emphasis will be on developing projects with public funding.
During the 10th Plan, 10 per cent investment is expected from the private sectors.
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