Budget 2012 should increase tax exemption limit on infrastructure bonds to Rs 1 lakh: Rajiv Lall, IDFC

In an interview with ET Now, Rajiv Lall, MD & CEO, IDFC talks about his expectations from the Union Budget 2012-13.

What are your expectations with respect to the infrastructure sector? Do you think that we will see the exemption limit as far as tax-free bonds are concerned to be increased from Rs 20000 to a Rs 100,000?

Yes. That would be quite useful because one of the challenges we are facing is to find ways of matching long-term savings to the long-term requirements of the infrastructure sector. More savings today lie in shorter term bank deposits. If tax incentives can motivate people to buy longer term securities that are better suited for the needs of the infrastructure sector, that would be a useful thing to do. I hope that the tax exempt limit for the 80CCF instrument is raised from Rs 20000 to Rs 100,000.

There is also talk that the Finance Minister may also allow banks to raise tax-free paper to fund infrastructure needs like NBFC, like IDFC do. What is your expectation on that front?

I do not see any reason why it should be theoretically restricted. The policy objective is to match savings of a particular maturity to the longer term requirements of infrastructure. Whether it is an NBFC that is doing it or a bank that is raising the money, it does not matter. The important thing is that the money raised is of minimum maturity that is long enough and those funds are then deployed systematically into infrastructure.