High-level panel to advise government on infrastructure funding

The government has set up a high-level committee under the chairmanship of Dr Rakesh Mohan to recommend measures to enable the requisite flow of investment for financing infrastructure during the 12th Five Year Plan.

The committee has since set up four key sub-groups on developing capital market for tapping long-term savings for investment in infrastructure projects, taxation and debt, foreign capital inflows and equity flows into infrastructure projects.

The approach paper for the 12th Plan as approved by the National Development Council (NDC), envisages infrastructure investments of over Rs45,00,000 crore between 2012 and 2017, the terminal year of the Plan.

Since the 12th Plan is under formulation, the government has taken certain measure like the setting up of India Infrastructure Finance Company Limited (IIFCL) as also schemes such as Infrastructure Debt Funding (IDF) and Viability Gap Funding (VGF) to achieve physical and financial targets for the infrastructure sector, the government said in a release.

The IIFCL was set up as a non-banking company for providing long-term loans for financing infrastructure projects that typically involve long gestation periods. The IIFCL lends up to 20 per cent of the project costs. The IIFCL has initiated several new measures such as Take Out Finance Scheme and Credit Enhancement Scheme besides direct financing of infrastructure projects.

India's first Infrastructure Debt Fund (IDF) with a corpus of $2 billion, was launched on 5 March 2012. The IDF, structured as a non-banking finance company with an initial equity share of Rs300 crore, is expected to expand the availability of debt to infrastructure projects.