Monday, 20 March 2017

One Infrastructure SPV ? More will follow



Economic Times  ( 19 March 2017 ) carries following news report :



“  Maharashtra to set up infra SPV to raise Rs 1 lakh crore 


Envisaging an investment of Rs 1 lakh crore in the next five years in the infrastructure sector, the Maharashtra government today proposed to set up a special purpose vehicle (SPV) to raise the fund. 


The SPV, '
Mahainfra', was announced by Finance Minister Sudhir Mungantiwar while presenting the budget in the assembly today. 


Mungantiwar said
infrastructure development is one of the top priorities of the BJP-led government. 


"However, infrastructure requires a large sum of capital. In the next five years, we envisage that about
Rs 1 lakh crore will be required to finance key projects," he said. 


Given the constraints in raising such a huge amount, there is a need to look at alternative methods to generate funds for
infrastructure development, he added. 



It is only a matter of time when all the States come out with their own Infra SPVs – something which I have been urging the State Chief Ministers through my following blogs / emails :


·         Creating Wealth to Create Jobs   (  26 Feb 2014  )
·          


·         Don’t  Ask  How  ?  ( 14  April  2014  )
·          


·         A  Case  for  Zero  Personal  Income  Tax  ( 11  Nov  2014  )
·          


·         A Virtuous  Circle  ( 04  Jan  2015  )
·          


·         A  Dream  House  by  2020  ?  (  01  Sept  2015  )
·          


·         Making  Molehill  out  of  a  Mountain  ?  ( 19  Nov  2015  )
·          


·         Structural  Reforms  ?  (  30  Jan  2016  )
·          


·         Make  Opposition   Irrelevant  ( 18  Feb  2016  )
·          


·         Making  India  a  Tax  Haven  ?  (  04  April  2016  )
·          


·         “ Not  So  Smart  “ Cities  ?  (  05  Sept  2016  )
·          


And there will be a virtual race among the States if Shri Mungantiwar succeeds in persuading Shri Arun Jaitleyji to declare a INFRASTRUCTURE INVESTMENT AMNESTY SCHEME , under which :


·         Holders of BLACK MONEY ( domestically or abroad ) can invest into such State Infra SPVS ( Bonds / Equity / Fix Deposits etc )


·         There will be no restriction on the amount of the BLACK MONEY that they may invest


·         No questions will be asked as to the source of the investments


·         All investments will need to be made from a bank account


·         There will be no inquiry / litigation / prosecution / punishment , in respect of such BLACK MONEY investments , under any law


·         A person can invest in any number of SPVs floated by any number of States


·         All such investments shall remain locked-in for a period of 10 years


·         Investment Instruments can be gifted to close relatives


·         Amounts maturing after the lock-in period ( with accumulated interest or capital gain ) will be exempted from Personal Income Tax



If such a SPV-specific AMNESTY SCHEME is introduced , within 6 months , we will see BILLIONS of DOLLARS worth of BLACK MONEY flowing into INFRA SPVs – obviating the need for FDI .  There will be an unprecedented push to Infrastructure , with consequent generation of millions of jobs  !



Remember , how , a few months back , Indonesia succeeded in converting $ 300 BILLION worth of BLACK MONEY into productive WHITE MONEY , by taxing at 4 %  !



The Scheme suggested by me will set up a fierce – but healthy – competition among the States to woo the BLACK MONEY holders !



21  March  2017






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