M A I N   N E W S

Government doles out more concessions
50,000 cr for agro-infrastructure; bonds for senior citizens
Tribune News Service

New Delhi, January 9
A day after announcing sweeping tax sops, the government today flashed the populist card and announced a slew of measures aimed at addressing “life-time concerns” of citizens.

The measures include a Rs 50,000-crore programme for creating agri-infrastructure and a credit fund, allowing the Food Corporation of India to raise funds from the bonds market, a special interest rate for rural housing, small enterprises, infrastructure projects and education loans, a revised policy of external commercial borrowing and a special savings instrument for senior citizens.

NABARD has been asked to work out details of a Rs 50,000-crore programme spread over the next three years for the purpose of improvement of agriculture infrastructure and credit corpus.

Any funds needed by NABARD, in addition to the existing unutilised Rural Industries Development Finance (RIDF) funds, will be made available by the government in consultation with the Reserve Bank of India “in an appropriate mix between finances raised from the capital markets and budgetary resources”.

The interest rate for ultimate borrowers from this fund is expected to be within low competitive rates (200 basis points below the prime lending rate), “consistent with the current interest rate regime operating in regard to the RIDF and appropriate risk premium”.

“Reasonable risk mitigation measures, including partial guarantees that are required for this purpose by NABARD, will be considered favourably by the government,” Finance Minister Jaswant Singh said.

The fund is expected to be operational within four weeks.

Mr Jaswant Singh said “what must be addressed are wasteland development, minor irrigation, functioning and viability of cooperatives, grading, certification, storage of agro-products, their processing, cold chains and modern abattoirs” and for this purpose, agri-infrastructural facilities “need a quantum improvement”.

On the politically contentious food subsidy front, the government has decided that starting from April 1, 2004, the Food Corporation of India will be allowed to raise funds from the bonds market backed by a government guarantee.

The move, the government estimates, is likely to reduce the Centre’s food subsidy bill by Rs 2,000 crore per annum.

A new rural housing scheme called the Atal Grameen Griha Yojana will be launched and National Housing Bank, in consultation with the RBI, will identify the measures for making the repayment procedure more flexible. The scheme will be operational by April 1, 2004.

Moreover, the government also announced the launch of a special fund for small and medium enterprises.

The fund, to be operated by the Small Industries Development Bank of India (SIDBI), will have an initial corpus of Rs 10,000 crore. The interest burden to ultimate borrowers from this fund is estimated to be less by 2 per cent of the PLR and will be operational within four weeks.

A special interest rate regime will also be brought about for educational loans, the Finance Minister said, adding that the existing education loan scheme of banks would be liberalised to allow access to higher loans at 2 per cent below the PLR.

Senior citizens will be provided with a new savings instrument and a new Dada-Dadi Bond, will be introduced from April 1, 2004. Persons above the age of 60 years will be eligible to subscribe to these bonds, which will carry a rate of return higher than the market rate of interest.

For infrastructure financing and providing access to cheaper funds for the industry, the RBI has been requested to frame and issue appropriate guidelines for revised policy on external commercial borrowings (ECBs).

“A new, more liberalised policy to promote investment activity in industry, including in small and medium enterprises, has been finalised. This revised policy provides automatic approvals for the industrial sector, especially for infrastructure, but including the SMEs, provided it is made for a minimum period of five years,”Mr Jaswant Singh said.

The scheme minimises discretionary elements, simplifies and rationalises the procedures and provides automatic route for ECBs with an average maturity of five years and above “as long as they are utilised for investment in critical sectors”.

In addition, a package of measures has also been announced for making cheaper funds accessible for the infrastructure and manufacturing sector. A consortium of banks and financial institutions — the IDBI, the IDFC, the LIC, ICICI Bank and the SBI — will appraise major projects and provide loans at 2 per cent below the PLR.

Towards this end, an aggregate additional investment of Rs 50,000 crore will be catalysed over the next three years in infrastructure and manufacturing projects such as power generation and sea ports.