Govt readies Rs 50,000 crore for infrastructure projects

The government is planning to set up a special dedicated fund to provide loans to infrastructure projects — roads, airports, power plants or ports — being developed by private companies as well as by government-private joint ventures. The proposed fund is expected to have a corpus of around Rs 50,000 crore. The idea is to ensure that large and crucial infrastructure projects are not held up due to want of funds. “Although spending more on infrastructure cannot have an impact on the economy overnight, big projects and big investments will certainly send a very positive signal,” department of economic affairs secretary Ashok Chawla told ET . The proposed fund may be operated through either of the two infrastructure funding agencies — IDFC or the India Infrastructure Finance Company (IIFCL). One factor that would make the proposal a success in funding collaborative projects would be the ability of the private developer and the partnering state agency to design viable projects. The slowdown in many sectors has already started affecting public-private partnerships. For example, the fall in air traffic due to high fares has directly hit projects around airports, such as roads, where toll collection has fallen way below the initial estimates of the developer, based on which he bids for the project, said an infrastructure projects expert. Prime Minister Manmohan Singh had recently said expanding investment in infrastructure sector can play an important “counter-cyclical” role in the current situation. The government is also willing to provide funds to even private projects because of the unavailability of low-cost long-term funds, essential for building utilities. Mr Singh, who has promised to address the cash shortage of infrastructure companies, has also urged foreign businessmen to invest in Indian infrastructure projects during his recent visit to the Middle East. The country needs more than $500 billion over the next four years to widen existing roads and highways, to modernise 35 non-metro airports, to lay new rails and to provide electricity to all rural households. The government’s ambitious target is to step up investments in infrastructure to 9-11% of the country’s gross domestic product from 5% in 2006-07. The government is also looking at proposals made by the Planning Commission on providing funds to infrastructure companies.