India likely to get more multi-billion $ funds

The country may see more multi-billion dollar infrastructure funds like the $5 billion fund, known as India Infrastructure Initiative, created by Citigroup, Blackstone, IDFC and IIFCL, finance minister P Chidambaram said today. Speaking at a conference of chief secretaries on public-private partnership (PPP) here, Chidambaram said there was no dearth of funds for infrastructure projects.

"The problem is we do not have adequate pipeline of projects. Large private funds are looking at India with interest for funding infrastructure projects. Similar funds like India Infrastructure Initiative are waiting to be launched."

Officials told Business Standard that some Japanese companies are interested in launching an infrastructure fund in India. "We are also in discussion with the Reserve Bank of India for providing money for infrastructure funding. This will make available an additional $5 billion funding," Chidambaram added.

Gajendra Haldea, adviser to Planning Commission Deputy Chairman Montek Singh Ahluwalia, said at current estimates, India would need Rs 17,57,000 crore of investment in infrastructure.

The central government would provide Rs 7,44,000 crore funds while states are expected to provide Rs 4,31,000 crore. "Private companies are expected to rope in Rs 7,44,000 crore (33 per cent of the total fund requirement) funds," he added. Chidambaram also announced a Rs 100-crore corpus to help state governments in preparatory work of projects coming up with public-private participation.

"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," he said.

The fund, to be called India Infrastructure Project Development Fund, would bear up to 75 per cent 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. He said 31 proposals under PPP were received during 2006-07, out of which 21 involving a project cost of Rs 9,325 crore were given in-principle or final approval.

Similarly, 25 proposals under viability gap funding were received from state governments last fiscal, of which 18 were given in-principle approval.