AAI tries again for Rs 5,000-crore bonds to modernise airports

New Delhi: The Airports Authority of India (AAI), according to a senior civil aviation ministry official, has again sought permission from the finance ministry to raise Rs 5,000 crore through tax-free infrastructure bonds.
The money is for modernisation of airports.
This is the second time the state-run airport operator has approached the government with such a proposal.
The earlier proposal was turned down on the reasoning that buyers for these bonds were limited and allowing AAI would affect the plans of other government agencies.
So far, the National Highways Authority of India (NHAI) and Rural Electrification Corporation of India (REC) are the only two government agencies allowed to issue such tax-free bonds, known as 54EC bonds (after Section 54EC of the Income Tax Act, 1961). These are short-term bonds with a three-year maturity.
Under the income-tax law, one can save on payment of capital gains tax if the amount is used for repurchase of property within a 12-month period. Alternatively, capital gains tax can be avoided by investing in bonds issued by NHAI and REC.
A senior AAI official said that in the new proposal, they had requested the government to give a go-ahead, as they would be raising the money only once, not annually like NHAI and REC.
In the current financial year, AAI plans to invest Rs 4,500 crore on modernisation of the various airports run by it. In contrast, it has received only Rs 85 crore for plan expenditure for the year from the government. However, it gets special funds to build airports in the northeastern part of the country.
06/12/10 Mihir Mishra/Business Standard

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Categories: Airports Dec 2010