After tapping the World Bank and the Housing and Urban Development Corporation (Hudco) for funds, the AP Capital Region Development Authority (APCRDA) is gearing up to raise about Rs 2,000 crore through `masala bonds’ to build Amaravati.`Masala bonds’ are rupeedenominated bonds issued overseas to raise money .Unlike the conventional dollar bonds, `masala bonds’, though issued overseas, are linked to the rupee and the borrower repays in Indian currency . Since these are not linked to dollar, they are not affected by the fluctuating rate of the US dollar in the international market.
The APCRDA will also raise Rs 8,000 crore through external funding agencies.The APCRDA proposes to utilise the money for crea tion of infrastructure in the upcoming capital city. It includes roads, drainage system and laying electricity cables. The APCRDA needs to return about 11,500 acres developed land to farmers, who participated in the land pooling scheme.
It will soon hold talks with the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank, headquartered in China.
The central government has agreed in principle to permit the state government to borrow optimal loan of Rs 4300 crore each from the two external funding agencies.
“We have a new option of borrowing from external funding agencies. The socalled masala bonds will be of help to the APCRDA.They will not be a burden on the exchequer. These bonds are issued outside the county and are denominated in rupees,“ said APCRDA additional commissioner V Ram Manohar Rao. “We will pursue various external agencies. We also plan to raise Rs 2000 crore by floating masala bonds,“ he added.
According to officials, the World Bank has agreed to fund Rs 4,300 crore as first instalment.
The central government has agreed to provide counter guarantee to the AP government for the WB loan up to Rs 7,200 crore.The WB loan is repaying over a period of 35 years at an interest rate of three per cent per annum.
eenadu news paper 14-08-2016: http://epaper.eenadu.net