Infrastructure trust fund will be finalised within 2 months: Arvind Mayaram

The Government is working on new Infrastructure Trust Fund (ITF) and structure will be finalised in next two months which is in the nature of Real Estate Investment Trusts (REIT), said Dr Arvind Mayaram, Secretary, Department of Economic Affairs, Ministry of Finance at an Assocham event held in New Delhi.  . 
 
While addressing the Assocham 3rd International Summit on Infrastructure Finance, Dr. Mayaram said, “Under the new structure of ITF, the underlying revenue of project will be transferred to a trust and the trust will issue units to investors, including private and foreign investors.” The new structure is mainly popular in countries like Singapore, Hongkong and USA.
 
“The innovative ways to finance infra projects like public private partnership (PPPs) that offer a number of advantages in terms of leveraging public capital to attract private capital and undertake a larger number of infrastructure projects, introducing private sector expertise and cost reducing technologies to bring in efficiencies in operation and maintenance. Therefore, the governments in various economies are promoting PPPs an effective tool for bringing private sector efficiencies in creation of economic and social infrastructure assets and for delivery of quality public services, added Dr. Mayaram.
 
“Infrastructure Debt Funds (IDFs) through innovative means of credit enhancement is expected to provide long-term low-cost debt for infrastructure projects. The cost and tariff of infrastructure services are likely to go down as a result of low cost long term debt provides by IDFs. Potential investors in IDF may include off-shore institutional investors, off-shore high net worth individuals, and other institutional investors (insurance funds, pension funds, sovereign wealth funds, etc.). The income of infrastructure debt funds has been exempted from income tax. The reduction in withholding tax has also been allowed on interest payment on borrowings of IDFs from existing 20 per cent to 5 per cent,” he said.
 
Mr. Mayaram also added, “The deficit in infrastructure sector is not peculiar to only the developing economies; the advanced economies are also facing the challenge of maintaining and upgrading the extensive infrastructure networks that have been created. It is estimated that the US alone would require at least $ 2 trillion to meet its infrastructure needs and the forecast investment needs for infrastructure improvements total upward of 2 trillion Euros across the continent.”

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