A government panel set up earlier this year to find resources for India’s ₹111 trillion infrastructure plan is expected to recommend the creation of development finance institutions (DFIs) and infrastructure recycling, besides other steps, a government official aware of the matter said. The committee is expected to submit its report this week.
The government has already started work on setting up a DFI for infrastructure, the official said on condition of anonymity. The committee, which includes finance ministry officials, private financial entities and pension funds, aims to tap banks, financial markets and global investors for India’s planned national infrastructure pipeline.
“The initiative has been private sector driven. We have formed five sub-groups under panel, comprising officials from pension funds, investment banks, State Bank of India, and NIIF (National Infrastructure Investment Fund), among others to look at various methods of infrastructure financing. Asset recycling (to improve and mobilize resources through InvITs, toll-operate-transfer model in highways sector), project finance, creating DFIs, among others," the official said.
The development assumes significance as focus on infrastructure sector is expected to help restart the economy damaged by the coronavirus disruption. On Monday, Reserve Bank of India governor Shaktikanta Das said there was a need for a big push for mega infrastructure projects to restart the economy, in which private and public sectors will have to play an important role in financing investments.
The official cited earlier said the finance ministry has already started working on the structure of a new DFI—a government-backed specialized institution to offer funds, where borrowers are unable to get it from commercial lenders—which is likely to be finalized and set up in the next six months. Currently, DFIs are sector-specific, such as Rural Electrification Corp. Ltd (REC) for the power sector, National Bank for Agriculture and Rural Development (Nabard) to provide financial assistance to irrigation projects, agriculture storage and marketing infrastructure and food processing in the agriculture, and Indian Railway Finance Corp. to fund rail infrastructure among others.