Union Cabinet approves raising Extra Budgetary Resources to augment infrastructure spending

September 22, 2016

The Union Cabinet has given its approval to raise Rs. 31,300 crore in FY 2016-17 to augment infrastructure spending.
Besides, it has also given approval to service principal and interest against the Extra Budgetary Resources (EBR) of Rs. 16,300 crore by Union Government for infrastructure spending.
Key Facts

The EBR is proposed to finance funds to be raised by Indian Renewable Energy Development Agency (IREDA), Power Finance Corporation (PFC), Inland Waterways Authority of India (IWAI), and National Bank for Agriculture and Rural Development (NABARD).
This implies that interest and principal in respect of the EBR of Rs.16,300 crore will be financed by Union Government by making suitable budget provisions.
It will supplement the efforts of the Union Government to improve infrastructure spending and also improve revenue-capital mix of expenditure for a more sustainable growth.

Background

Infrastructure spending is one of the key parameters for judging the sustainability of growth in a country.
It is basically measured interms of the proportion of Capital expenditure to the total expenditure.
In line with this approach, Union Finance Minister the Budget Speech 2016-17 had made an announcement to augment infrastructure spending further.
For this purpose Union Government will permit mobilisation of additional finances to the through raising of Bonds during 2016-17.

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