The legislation for setting up a development finance institution to fund infrastructure projects will allow for such institutions to be formed by the private sector as well, Finance Minister Nirmala Sitharaman told India Inc on Friday, promising an ‘honest leakage-free implementation’ of the Budget proposals for 2021-22.
While the Budget has provided a fiscal push for capital expenditure in infrastructure sectors with a multiplier effect, it relies on private sector participation in a big way, Ms. Sitharaman said, addressing more than 180 CEOs in a closed-door interaction with the Confederation of Indian Industry (CII), urging them to step up investments. Infrastructure outlays in areas such as power, roads, ports and airports would facilitate the private sector, she said, while outlining healthcare and agriculture as the other priorities of the Budget.
“Though government will provide some capital for the proposed Development Finance Institution, the DFI will also raise capital from the market,” the Minister said. “In addition, the DFI Bill will provide legislative space for private DFIs.”
“Similarly, the Asset Reconstruction Company for the management of non-performing assets (NPAs) will be floated as a holding company by the banks themselves, with support from the government,” Ms. Sitharaman said, according to an official statement after the meeting.
Stressing that transparency and tax stability were the key guiding principles for Budget 2021-22, Ms. Sitharaman mooted a continued dialogue between industry and government. CII president Uday Kotak said the Budget proposals displayed a mindset of encouraging private enterprise and respecting the markets.