Read the passage given below and then answer the questions given below the passage. Some words may be highlighted for your attention. Pay careful attention.

An average economic growth of 8.6 per cent over the past three years has India bursting at the seams, so to speak, with its infrastructure sector stretched way beyond capacity. Spiraling demand for air travel, reliable power supply, and efficient ports, roads, and railways has not been matched by a proportionate increase in supply. It is widely acknowledged that severe supply-side bottlenecks can retard the economy’s potential rate of growth. There is a palpable urgency and competition among states to provide better infrastructure to users but most infrastructure projects are facing serious land constraints as well as the ire of those displaced by expansion of infrastructure facilities. Rural as well as urban land holders are now increasingly aware of their rights, demanding sufficient compensation to form a source of livelihood over a long period of time.

To improve India’s poor roads, narrow bridges, and dilapidated airports which choke the flow of goods and people, a large injection of capital into the system is required. The infrastructure sector is being paid maximum policy attention to ensure that supply shortages do not trigger runaway inflation. At present, it offers significant opportunities to private investors, both domestic and foreign.

The government has been dismantling longstanding barriers and actively encouraging private investment in big public-works projects. Private-sector companies have been invited to manage airports, which used to be exclusively government-run. The government is helping private sector developers by lowering their risk in road projects. Telecom and aviation sectors have demonstrated that introduction of private capital introduces discipline of time management and leads to remarkable results even within the very short term. To harness private sector efficiencies in design and construction of infrastructure projects the Planning Commission envisages that at least 75 per cent of new investment into infrastructure will come from the private sector—some in the form of fully private ventures, others as public–private partnerships (PPPs). The aim is to make sure infrastructure does not become a capacity constraint on 9 per cent growth rate of the economy. This is feasible when investment in infrastructure grows to about 9 per cent of GDP compared to the current 5 per cent. It is estimated that over the next five years India will need US$ 475 billion of investment in infrastructure to this end. The government is keen to raise funds from various sources using different financial instruments.

The committee for the launch of Dedicated Infrastructure Funds (DIFs) has proposed listing options for DIFs to provide liquidity to such funds. The committee has also recommended that the proposed DIFs should operate as a closed-ended scheme with a maturity period of seven years.

Considering the long-term and closed-ended nature of DIFs, the committee suggested that retail investors be given tax incentives. DIFs should be given the option to invest the entire corpus in unlisted securities including equity and debt instruments (SEBI, 2007).