India Infrastructure Project Development Fund Scheme

India Infrastructure Project Development Fund Scheme

Subject: Economy

Context:

The Finance Ministry has come out with a scheme to extend financial support for project development expenses of Public Private Partnership (PPP) projects in the infrastructure sector.

India Infrastructure Project Development Fund Scheme

• It is a scheme for Financial Support for Project Development Expenses of PPP Projects.
• It aims at improving the quality and pace of infrastructure development in the country by encouraging private sector participation in the infrastructure sector.
• It ia s  Central Sector Scheme which will aid development of quality PPP projects by providing necessary funding support to the project sponsoring authorities, both in the Central and State Governments, for creating a shelf of bankable viable PPP projects for achieving the vision of modern infrastructure for the country.
• Under the scheme-’India Infrastructure Project Development Fund’ (IIPDF), Project Sponsoring Authorities (PSA) will get assistance up to Rs 5 crore.
• Funding will be given for meeting project development costs–expenses incurred by PSA in respect of feasibility studies, environment impact studies, financial structuring, legal reviews and development of project documentation, including concession agreement, commercial assessment studies, grading of projects, etc
• The government can also use funding under the IIPDF Scheme to engage consultants/TAs for specific assignments of professional services, including providing support to States/UTs.
• It will not include expenses incurred by the PSA on its own staff, but could be spent on consultant and transaction advisors.
• Funding under IIPDF Scheme is in addition to the already operational Scheme for Financial Support to PPPs in Infrastructure (VGF Scheme).
• Funding under the IIPDF Scheme shall not be recovered

VGF Scheme

• Infrastructure projects undertaken in the PPP mode that are economically justified but commercially unviable, are supported.
• Under this scheme, PPP in areas like wastewater treatment, solid waste management, health, water supply and education, could get 30% of the total project cost from the Centre.
• Separately, pilot projects in health and education, with at least 50% operational cost recovery, can get as much as 40% of the total project cost from the central government.
• The Centre and States would together bear 80% of the capital cost of the project and 50% of operation and maintenance costs of such projects for the first five years.