With the international liquidity crunch making its impact felt in India, the government and the Reserve Bank of India (RBI) have taken a series of measures, since the middle of 2008, to bolster the infrastructure sector, as this sector is seen as a potential engine for growth in a slowing economy.
Accessing funds overseas
On the external commercial borrowings (ECB) front, the RBI created a wider window for the infrastructure sector for end use involving rupee capital expenditure. Soon after, however, end use for rupee expenditure was liberalized to the position prevailing prior to August 2007 – i.e. freely permissible under the automatic route for corporate and infrastructure-related loans alike – up to US$500 million per year.
The government’s measures do not stop here and its commitment to the sector was equally evident in the monetary and fiscal measures constituting the recently announced stimulus package – part II.
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Akshay Jaitly is a partner at Trilegal in Delhi and Ameya Khandge is a counsel at Trilegal in Mumbai. The firm has offices in Delhi, Mumbai, Bangalore and Hyderabad and has over 100 lawyers, some of whom have experience with law firms in the United States, the United Kingdom and Japan.
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