The government has decided to allow the use of external commercial borrowings (ECB) for capital expenditure on the maintenance and operations of toll systems for roads and highways.
The union finance ministry also announced further liberalisation of ECB policy for the power sector. Power companies are at present allowed to utilise 25 per cent of their overseas borrowings to refinance rupee debt.
This has now been raised to 40 per cent, provided they utilise the remaining 60 per cent on new power projects.
The decision has been made to augment avenues for financing of such projects, a government release said today.
Finance minister Pranab Mukherjee had, in his budget for 2012-13, proposed allowing ECBs for capital expenditure on the maintenance and operations of toll systems on roads and highways provided these are a part of the original project.
This policy decision will provide an additional source of low cost capital and encourage greater investments in road construction projects, it said.
The Reserve Bank of India (RBI) is expected to issue circular/notification giving effect to the budget announcement within 7 days.