New Delhi: India has approached the World Bank to set up a global infrastructure facility (GIF) to help finance about USD 1 trillion of investments needed for projects in the sector.
"India has asked the World Bank to set up a GIF which will provide loans to infra projects. The World Bank is working on it as they feel the development of the sector is important," a senior government official said.
The GIF would be set up with contributions from India, the World Bank, sovereign wealth funds and pension funds.
"The facility would benefit the SWFs and PFs as they would get higher returns by investing through GIF as compared to direct investment into projects," the official added.
The move will also help to bridge the current account gap, which soared to an all-time high of 4.8 percent of GDP in fiscal 2012-13, putting pressure on the local currency.
The government has been making efforts to develop infrastructure such as roads, railways and ports. The investment needed in the sector in the five-year period ending March 2017 is estimated at USD 1 trillion, about half of which is expected to come from the private sector.
In order to promote long-term and low-cost funding for the sector, the government has allowed Infrastructure Debt Funds (IDF) as a new category of financial intermediaries to refinance loans.
Currently, there are six IDFs -- four from NBFCs and two in the mutual fund space.
To fast-track infrastructure development, the government set up a Cabinet Committee on Investment, which has approved 209 projects worth Rs 3.84 lakh crore since January 1.
Prime Minister Manmohan Singh said in his Independence Day address the government will kick-start new infrastructure projects, including eight new airports and two new sea-ports, in the coming months to boost sluggish economic growth.
With economic growth slowing to a decade low of 5 per cent in 2012-13, the Congress-led UPA government has further opened the economy to foreign direct investment and now wants to use investments to return to a high-growth trajectory.