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Wednesday Dec 06 2000 | Updated 0030 hrs IST 1400 EST
Gujarat plans to raise Rs 5,000 cr viz bonds

Sunil Raghu
THE GUJARAT government plans to tap the bond market to raise Rs 5,000 crore required to complete the Narmada Project by 2005.

Talking to the Economic Times, minister for major irrigation and Narmada, Jaynarayan Vyas, said the state government was exploring four different instruments to raise the required money.

"Sometime early next year, we will start tapping the bond market. We are in the process of finalising the means to raise the required Rs 5,000 crore. Traditionally, investment in the bond market is done after looking at the security, liquidity, safety and returns. We will add Emotional property to tap funds," he added.

Giving details about the instruments, Vyas said that government would go for a combination of debt instruments, insurance-linked bonds, NRI bonds and small savings.

"We have talked to a number of banks for debt and also merchant bankers to explore possibility of raising long-term debt at low interest. We do not want to pay more than 7 to 8 per cent interest on the money accrued. Hence, we are going for unique instruments. These include 5-6 per cent NRI bonds wherein NRIs would bear the risk of convertibility. We would appeal to their emotions and ask them to lend for development in the motherland. We hope to raise as much as Rs 1,500 crore from NRIs," he added.

The other unique instrument he talked about was that of Water Bonds for industries, wherein an industry can buy quantity of water at todayís rate and redeem it at a later stage.

This, according to him, would help raise Rs 2,000 crore with no interest. "They can buy water bonds at todayís rate of Rs 6.5 per 10,000 litres or around that, and redeem it when maybe the price of industrial water may be very high," Vyas told the Economic Times.
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