Budget provisions make getting funds for infra projects easy
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With Union Budget making it easy for infrastructure companies to secure debt, projects in the city have got a boost.
"Projects for which financing through commercial banks is challenging will benefit. Strengthening the infrastructure bond market was on cards for a long time," said Ashwini Bhide, additional metropolitan commissioner, MMRDA.
As per the budget, Indian Infrastructure Finance Corporation and Asian Development Bank will offer additional credit to infrastructure companies that wish to draw long-term funds from the bond market.
Finance Minister P Chidambaram also spoke about boosting infrastructure debt funds, which will raise resources, and through take-out financing, credit enhancement and other such methods provide long-term low-cost debt for infrastructure projects.
"These measures will benefit several MMRDA projects with long gestation periods. The range of financial products available for infrastructure projects is limited. The equity to debt ratio is typically 1:3 and getting debt is not easy. Encouragement to infrastructure debt is a welcome step," said S V R Srinivas, additional metropolitan commissioner, MMRDA.
For several infrastructure projects implemented on public-private partnership model, attaining financial closure has become a major challenge as getting loans is not easy and commercial banks are cautious while appraising projects. As a result, while financial closure ought to ideally happen within six to nine months of picking a bidder, it often stretches to nearly a year weighing on the project deadline.
To speed up implementation of infrastructure projects, the budget also proposed a deduction of 15 per cent for companies investing Rs 100 crore or more in plant and machinery from April 1, 2013, to March 31, 2015.
"We don't have machinery such as tunnel boring machines or rolling stock for mass transit projects, so this will be beneficial for projects requiring expensive machinery," Srinivas said.