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The Union Budget has laid strong emphasis on infrastructure creation, according to Hemant Kanoria, Chairman and Managing Director, Srei Infrastructure Finance Ltd.
Providing exemptions to banks from CRR and SLR obligations by linking those to long-term infrastructure loans is a masterstroke and can prove to be a game-changer in the field of infrastructure financing. It will also help mobilising funds through issue of infrastructure bonds, the CMD said.
“The proposed Infrastructure Investment Funds on the lines of Real Estate Investment Funds is another positive step. We have been advocating for allowing tax pass-through for such funds for quite some time. This will help mobilise more funds for infrastructure from both India and abroad,” Kanoria said according to a release issued by the company.
Filip to financial hubs
In addition, addressing the concerns of foreign portfolio investors; bringing clarity on long-term capital gain tax issue will facilitate more fund houses currently operating from overseas, to shift their base to India. This can provide a fillip towards setting up financial hubs in India.
According to him, the substantial budgetary allocations made for the road and housing sectors; emphasis to develop smart cities as satellite towns for existing metros and the intent to replicate Gujarat’s ‘Rurban’ model will stimulate infrastructure development.
“The 10-year tax holiday on power sector is also encouraging apart from the incentives provided to renewable energy,” Kanoria said.
Retrospective taxation
The SREI CMD, however, felt that there is need for some clarity on the retrospective taxation issue. Another point that escaped notice was the non-banking finance company (NBFC) sector in the budget.
“We have been advocating the need to revive leasing in India as it is an empirically proven tool for infrastructure creation all over the world. Leasing is confused by tax authorities both as a sale as well as a service. Thus, taxed multiple times, thereby eroding its effectiveness,” he said.
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