The government on Tuesday said that the private sector will be allowed to raise resources by issuing long-term infrastructure bonds carrying tax benefits.

“It (proposal to issue long—term infrastructure bonds) will of course be for private sector as well as public sector,” Finance Minister Pranab Mukherjee said in his address to a conference on infrastructure sector here.

In order to promote investment in the infrastructure sector, the Budget for 2010-11 proposed to exempt investment up to Rs 20,000 in long-term infrastructure bonds from income tax. The amount is in addition to the existing overall tax exemption limit of Rs. 1 lakh per annum for personal income tax payers.

The long-term infrastructure bonds entitled for the benefit would be notified by the government later.

Noting that funding was a major constraint, Mr. Mukherjee said, the decision will help in augmenting resources of public as well as private sector for developing the country’s infrastructure.

The investment requirement for the infrastructure sector was pegged at $ 500 billion during the Eleventh Plan (2007-12) and is expected to double to over $1 trillion in the Twelfth Plan (2012-17).

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