The government is considering the proposal to build a risk guarantee fund of Rs 20,000 crore for Infra sector to promote investment from private sector. According to sources, the establishment of the Risk Guarantee Fund for Infra sector is expected to attract the investment of the private sector by sharing the projects risk and reducing the burden on the project developer. He informed that this fund with an initial amount of Rs 20,000 crore can be managed by National Credit Guarantee Trustee Company Limited (NCGTC). This fund will bear the risk of development of a new project. In addition, additional safety measures should also be taken by the developer as a minimum stake and risk-based premiums can also be taken.
How much will be spent on infra?
Sources said that this fund would compensate for policy uncertainty and other non-commercial risks, which will encourage lenders to give large loans for large projects. He said that for the success of this fund, the guarantee of funds should be bankable and timely payment should be assured. According to the National Infrastructure Pipeline (NIP) report, it is estimated that by 2025, India will need to spend US $ 4500 billion (about Rs 390 lakh crore) on Infra by 2030 to realize the target of US $ 5000 billion by 2025 and continue the speed of growth by 2030. The report said that India’s ambition to maintain a relatively high growth rate depends on the Infra sector. However, the country suffers from weak infrastructure which is unable to meet the needs of increasing economy and growing population.
Why is it necessary work on infra
In the report of the workforce headed by the then Economic Affairs Secretary, it was reported that the quality of Infra Quality is one of the biggest obstacles in front of the Government of India’s ambitious program Make in India, which aims to help improve the manufacturing capabilities of the country and to help generate employment. This report released in the year 2020 said that if the government fails to stop the infrastructure deficit, corporate growth and investment may also be interrupted, about which some experts estimate that the disability costs four to five per cent of gross GDP. It said that the development of infrastructure can not only help to remove some of the disabilities that contribute immediately to economic expansion, but can also support strong long -term growth.