Financial Commitments of Government of India and the Special Purpose Authority :
Stage - I

• Diesel cess of Rs. 2,500 crores per year
• Funds from Basic Minimum Services (BMS), Employment Assurance Scheme (EAS), Rural Infrastructure Development Fund (RIDF) Rs. 2,500 crores per year
• Authority to raise Rs. 5,000 crores per year for a period of 5 years from the domestic sources by issuing a suitable instrument like tax free bonds
• Government of India to stand as guarantor and bear the interest on these bonds which will not be more than Rs. 2,000 crores in 8 years.
• The Authority to raise Rs. 5,000 crores as loans from domestic / external sources at an average interest of 8%. These borrowings would be guaranteed by the Government of India.
• The mobilized funds would be used for the development of village roads and payment of interest on borrowings during the first 5 years. From the fifth year, the repayment of tax-free bonds will start and by the tenth year repayment of loans with interest and repayment of tax-free bonds would be complete.