Infra debt fund guidelines by June end: Gopalan

The Finance Ministry today said guidelines for infrastructure debt funds are likely to be announced by June end, which will help the core sector meet its financing requirement, pegged at $1 trillion during the 12th Plan (2012-17).

"We are at work (on infrastructure debt fund). I am hopeful that we will be in position to complete (it) by June end. We are sorting out the glitches," Department of Economic Affairs Secretary R Gopalan said at a Ficci meet here.

In the Budget for 2011-12, Finance Minister Pranab Mukherjee had announced that the government will facilitate the establishment of dedicated infra debt funds through special purpose vehicles for attracting foreign investment in the infrastructure sector.

The government is aiming at the creation of more than one such debt fund, which will provide low-cost funds from abroad for financing the growth of the infrastructure sector.

In June, 2010, an expert panel headed by HDFC Chief Deepak Parekh had recommended setting up such a fund with an initial corpus of Rs 50,000 crore to meet the financial needs of the sector.

Gopalan further said the Reserve Bank was at advance stage of finalising the guidelines for a corporate bond market.

"The RBI is in final stages to come out with some path forward to make the corporate bond market more active and alive," he said.

A corporate debt market enables private industry to raise funds through debt instruments and channelise these into specific sectors, including infrastructure.

The country's poor infrastructure, which is seen as a major bottleneck for economic growth, requires an investment of a whopping USD 1 trillion in the 12th Plan, beginning 2012 and ending 2017. Of this, it expects 50% to come from the private sector.