The National Highways Authority of India (NHAI) and Rural Electrification Corporation Ltd (REC) have kept their targets to raise funds in the current financial year through tax-free infrastructure bonds unchanged, at a total of Rs 6,500 crore. Analysts feel it is a wise step not to raise the target now, as the market is yet to pick up in a big way.

REC raised Rs 2,500 crore in 2009-10 and targets to raise the same amount in the current financial year. However, NHAI could raise only Rs 1,200 crore in 2009-10 of its Rs 4,000 crore target but says it will raise the latter amount this year.

NHAI and REC are the only two companies allowed to issue the 54-EC tax-free infrastructure bond. A similar request from Airports Authority of India was turned down by the finance ministry.

Any capital gain from sale of long-term capital assets such as real estate or gold can get tax exemption by investing in the 54-EC infrastructure bonds.

Both NHAI and REC registered a huge increase in demand for such bonds in the last month of the last financial year.

“We have kept our target for this financial year unchanged at Rs 2,500 crore for this year, as our needs for this financial year are not much and this will be enough,” said a senior REC official, who did not want to be identified.

NHAI said it raised less because the need was limited. “As we are taking a lot of road projects now, we will need more money this year and we will raise the whole Rs 4,000 crore this year,” said a senior official, who did not want to be identified.

Also, the market has improved and we will be able to raise the amount, the official added. In 2008-09, NHAI had raised Rs 1,630 crore against a target of Rs 3,000 crore, while in 2007-08 and 2006-07, it had collected Rs 305 crore and Rs 1,500 crore, respectively.

NHAI would be awarding projects worth Rs 2 lakh crore by the end of 2010-11 and had made provision to raise Rs 3,455 crore through institutional and market borrowings in the coming financial year.

Though it could not utilise 13.6 per cent of the Rs 8,578 crore allocated in last year’s Budget, allocation for the current financial year had been increased by 27.9 per cent over revised estimates, to Rs 9,471 crore.

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September 2021