Govt floats Rs 100cr infra fund

The apathy of state governments toward infrastructure development today prompted the Centre to announce a Rs 100 crore corpus to help them in preparatory work of projects coming up under public-private partnership (PPP).

"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 at a conference of chief secretaries.

The fund, to be called India Infrastructure Project Development Fund, would bear up to 75% of development costs of projects till the bidding stage, he said.

If the bidding is successful, the amount given to states would be treated as interest-free loans, and in case the exercise fails, the assistance would be converted into grant.

In case of successful bidding, the money would be recovered from those who get the contract, he said.

Finance ministry sources said the fund would be sent to the Cabinet Committee of Economic Affairs after approval by the Finance Minister who had proposed it in the budget for 2007-08.

Although finances were available, there were not enough infrastructure projects on the shelf in states, Chidambaram said, noting that large private funds were looking at India with interest.

The Finance Minister reiterated that talks were on with the Reserve Bank to provide $5 billion from the forex reserves for infrastructure projects.