Budget Wishlist | Scrap withholding tax on foreign loans to power

Budget Wishlist | Scrap withholding tax on foreign loans to power
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First Published: Thu, Feb 14 2008. 02 15 PM IST

Subhash Sethi, vice chairman, Subhash Projects & Marketing Ltd
Subhash Sethi, vice chairman, Subhash Projects & Marketing Ltd
Updated: Thu, Feb 14 2008. 02 15 PM IST
New Delhi: The budget has allocated Rs790 billion for capital expenditure. We hope that this allocation will be used efficiently, effectively and expeditiously and that the country’s infrastructure would be raised several notches.
Subhash Sethi, vice chairman, Subhash Projects & Marketing Ltd
With considerable induction of foreign investments, dearth of public funds and private investment is no longer an issue of great concern. But a critical area for infrastructure developers is the high interest rate at 12-13%, hence a markdown here will definitely boost infrastructure development.
Expectations from the Finance Minister for power sector
• Lift all restrictions relating to inflow of venture capital funds. Given that around Rs10,00,000 crore investment is required by the power sector in the country by the year 2012. The domestic source of funds invested in the domestic market alone are not sufficient. Funds from overseas need to be availed.
• Remove withholding tax imposed on money borrowed from foreign infrastructure companies and financial organizations, which serve the power sector in India. If the proposal is implemented, the cost involved in borrowing funds from overseas companies may decrease by around 20%. The main aim of this reform is to decrease the power generation cost in the country.
Expectations for urban infrastructure
India is seeing rapid urbanization. The urban population has grown five-fold since 1947 and some 27% of India’s people now live in urban areas. Increasing urbanization has meant that a large number of settlements in the cities face shortfalls in housing and water supply, inadequate sewerage, congested traffic and pollution.
• Jawaharlal Nehru National Urban Renewal Mission (JNNURM) is giving a fresh impetus for urban reform. Infusion of funds from JNNURM is expected to increase municipal budgets seven or eight-fold and it is important that Urban Local Bodies (ULBs) have sound systems and procedures in place to ensure that these public funds are used efficiently and transparently.
Specific steps that the FM can take
• National guidelines on terms and conditions of payment, repayment, guarantee etc should be announced and given to all states. Currently the process is ad-hoc with states determining policies that may have political connotations.
• Need for transparent tendering system the way World Bank, Asian Development Bank and other international funding organizations do. They have a standard way of spending money and the same should be implemented across the country.
The author is vice chairman, Subhash Projects & Marketing Ltd. His company is engaged in executing turnkey projects in water management services, power transmission, distribution and infrastructure projects with focus on environmental engineering.
The author is vice chairman, Subhash Projects & Marketing Ltd
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First Published: Thu, Feb 14 2008. 02 15 PM IST