GS Paper - 3 (Economy)

Niti Aayog has suggested to the government to provide tax incentives for investment in InvITs, and bring them under the IBC to attract retail as well as institutional investors to achieve the goals of the National Monetisation Pipeline scheme. The Aayog in consultation with infra line ministries has prepared and released a report on National Monetisation Pipeline (NMP) this month.

What

  1. More tax-efficient and user-friendly mechanisms like allowing tax benefits in Infrastructure Investment Trust (InvITs) as eligible security to invest under Section 54EC of the Income-Tax Act, 1961, are important starting points for initiating retail participation in the instruments, the Aayog has recommended.
  2. Finance Minister Nirmala Sitharaman on 23 August 2021 had announced a Rs 6 lakh crore NMP scheme that will look to unlock value in infrastructure assets across sectors, ranging from power to road and railways.
  3. The asset monetisation does not involve the selling of land and it is about monetising brownfield assets.
  4. Since the trusts are not considered as 'legal persons' under the extant regulations, the Insolvency and Bankruptcy Code (IBC) regulations are not applicable for InvIT loans.
  5. InvITs are pooled investment vehicles that draw institutions and wealthy individual investors with returns from underlying assets such as the toll road.