Budget 2020

Equity support for IIFCL, NIIF at 22,000-crore

Our Bureau New Delhi | Updated on February 02, 2020 Published on February 01, 2020

The Centre plans to monetise 6,000 km of highways before 2024   -  istock/Sonia Dhankhar

6,000 km of highways to be ‘monetised’ before 2024; major port to be corporatised

To support the funding of infrastructure pipeline over the next five years that would require ₹103-lakh crore, the government has provided about ₹22,000 crore as equity support to two government-owned infrastructure financing agencies, which will help them mobilise ₹1-lakh crore.

In this context, Nirmala Sitharaman has announced, “This would cater for equity support to Infrastructure Finance Companies such as India Infrastructure Finance Company Ltd (IIFCL) and a subsidiary of National Investment and Infrastructure Fund (NIIF). They would leverage it, as permissible, to create financing pipeline of more than ₹1-lakh crore. This would create a major source of long-term debt for infrastructure projects and fulfill a long-awaited requirement.”

About 6,000 km of highways will be “monetised” before 2024, said Sitharaman, adding that a major port under the Centre will be corporatised and listed.

She also referred to faster development of 15,500 km of highways, including 2,500 km of access-controlled highways. She sought a continued focus on privatisation of Railways through station modernisation and running trains through private mode, while prioritising the rail-based transport project for Bengaluru.

Reforms for energy sector

For the energy sector, she urged States to opt for further reforms by adopting prepaid metering to lower losses of electricity distribution companies. She proposed a scheme to allow farmers to make money by putting solar units on their barren land and supplying electricity to the state grids.

Expansion of the national gas grid — from the present 16,200 km to 27,000 km — was another proposal. To deepen gas markets in India, further reforms will be undertaken to facilitate transparent price discovery and ease of transactions, added the Finance Minister.

Road Transport and Highways Minister Nitin Gadkari has stated that use of electronic toll collection through Fastags is increasing the toll revenue, and collecting a small part of revenue from fuel sold at expressways built by NHAI will help raise funds for the highways sector.

Capital outlay

“The capital outlay for roads, railways, and metro projects have been budgeted to increase marginally in 2020-21 BE over the 2019-20 RE. Though there has been some increase in the Budgetary allocations towards roads and Railways, the increase in overall capital outlay has remained significantly lower when compared to the requirement highlighted in the NIP,” said Shubham Jain, Group Head & Senior Vice-President, Corporate Ratings, ICRA Ltd.

He adding that the Budget has also made tax exemptions for Sovereign Wealth Fund in respect of investments made in infrastructure before March 31, 2024. This can support long-term capital inflows into the sector through routes like NIIF, InvITs and is also positive for the sector.

Published on February 01, 2020
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