Government quietly slashes UIDAI budget by over 50 per cent
10 Jul 2010
Under a new Section 80CCF introduced in the Finance Act 2010-11 investments in ''long-term infrastructure bonds'' of the Industrial Finance Corporation of India (IFCI), the Life Insurance Corporation of India (LIC), Infrastructure Development Finance Company (IDFC) and non-banking finance companies classified as infrastructure finance firms by the Reserve Bank of India (RBI) will be eligible for deduction up to Rs20,000.
Initially, these bonds will be issued by IFCI, LIC, IDFC and non-banking finance companies lending exclusively to infrastructure sector banks. The bonds will not be issued by banks.
According to Vikram Limaye, executive director and member of the board of directors, IDFC, the bonds would provide an additional avenue to raise long-term funds for infrastructure sector and to intermediate retail savings and channelise them into infrastructure sectors.
The government expects a $500 billion investment in infrastructure in the 11th Five-Year Plan ending March 2012, and has doubled the target to over $1 trillion for the 12th Five-Year Plan, 2012-17.
This Rs20,000 investment in infrastructure bonds is in addition to the Rs 1 lakh maximum deduction allowed for investment in various schemes covered under sections 80C, 80CCC and 80CCD of the I-T Act.
Exiting from these bonds would be possible for investors only after five years on the secondary market through trading or through redemption. Also they would be able to raise debt from banks by pledging of hypothecating these bonds after the five-year lock-in.
