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Infrastructure Investment Trusts (InvIT)

To fund infra projects, the infrastructure investment trust (InvIT) was proposed. Akin to a mutual fund which gathers funds from individual investors and pays them back dividends along with the principal amount, InvITs invest the pooled money of individual investors in infrastructure assets that are profitable. Gradually, the plan is to monetise select central public sector enterprises assets too using InvITs.

Union Budget 2018: How will the government fund its ambitious spending?

The union budget 2018, presented over a week back, was all about tough choices for the government. On one hand was the pressing need to up spending on crucial sectors such as infrastructure, healthcare, agriculture and education to spur growth, create jobs and alleviate distress of the poor and on the other hand was the need to heed the caution sounded by experts on sticking to fiscal deficit targets to avoid upsetting the macro-economic stability of the nation.

And with general elections scheduled next year in May, the government quite predictably delivered what is known as a “populist budget” that didn’t curb spending. It earmarked substantial funds for various social sector schemes meant for the economically weaker sections that form a crucial voter’s base.

This, however, also meant letting go of the fiscal deficit targets. But, in a smart manoeuver, the government ensured the slippage wasn’t too glaring – the revised fiscal deficit target stood at 3.5 percent of the GDP from the earlier 3.2 percent.

It now has its work cut out to raise funds to ensure spending targets are met and that the deficit doesn’t balloon further.

The million dollar question now: how does the government find the means to finance the ambitious projects?

Well, here are some of the important methods proposed by finance minister Arun Jaitley presented in the form of a slideshow. Scroll through to learn more about them.