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Revolving fund to help States develop infrastructure projects

Special Correspondent

Large private funds are eyeing India for investment purposes

— PHOTO: S. SUBRAMANIUM

GATHERING PACE: Union Finance Minister P. Chidambaram (right) shakes hands with Deputy Chairman, Planning Commission, Montek Singh Ahluwalia, at the Conference of Chief Secretaries on Public Private Partnerships, in New Delhi on Saturday.

NEW DELHI: In a bid to enthuse State governments in infrastructure development through public-private partnership (PPP), the Central Government on Saturday announced the setting up of a revolving fund with an initial corpus of Rs. 100 crore to assist in preparatory work to expedite implementation of such projects.

“It would be a revolving fund that will get replenished from successfully bid projects. In case it needs to be topped up, it would be topped up through budgetary support,” Finance Minister P. Chidambaram said while inaugurating a conference of chief secretaries on public-private partnership (PPP) in infrastructure.

To be called the ‘India Infrastructure Project Development Fund’, it would bear up to 75 per cent of the development costs of projects till the bidding stage, Mr. Chidambaram said. Explaining its features, he said that if the project bidding was successful, the amount given to States would be treated as interest-free loans and the money would be recovered from those who bag the contract. In the case of failure at the bidding stage, financial assistance would be converted into grants, he said.

Once cleared by the Finance Minister, the proposal to set up the fund is to be placed before the Cabinet Committee on Economic Affairs for final approval.

Mr. Chidambaram pointed out that even though finances were available as large private funds were eyeing India for investment purposes, there was a dearth of on-the-shelf infrastructure projects for implementation in States. Despite the availability of funds, there was a paucity of infrastructure projects in the pipeline. In fact, following the successful launch of two funds for infrastructure projects, including the $5-billion fund by Citigroup, Blackstone, IDFC and IFCL combine, similar initiatives were waiting for launch in India, he said.

Alongside, talks were on with the Reserve Bank of India (RBI) for providing $5 billion from the country’s foreign exchange reserves for funding infrastructure projects. To some extent, however, the pace of implementation of infrastructure projects, Mr. Chidambaram said, had gathered momentum in 2006-07 with 12 States agreeing to sign MoUs with the Asian Development Bank (ADB) for providing technical assistance to such projects in PPP mode. Of these, two MoUs had already been inked, he added.

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