Centre raises viability gap funding for social infra projects

Union Finance Minister Nirmala Sitharaman on Saturday announced a hike in viability gap funding (VGF) for development of social infrastructure. In her fourth tranche of economic stimulus, she said Rs 8,100 crore will be provided as viability gap funding for development of social infrastructure.

She said social infrastructure projects suffer from poor viability. Therefore, the government will enhance the quantum of viability gap funding up to 30 per cent each of the total project cost as VGF by central and state/statutory bodies.

For other sectors, existing VGF support of 20 per cent each from the government and state/statutory bodies shall continue.

The projects will be proposed by the Central Ministries and state government/ statutory entities.

In her fourth press conference in as many days, she said the focus of the fourth stimulus would be coal, minerals, defence production, civil aviation sector, power distribution companies in Union Territories, space sector and atomic energy sector.

She said steps taken during the recent past include fast track investment clearance through an empowered group of secretaries. Project development cell has been set up in each ministry to prepare investable projects and coordinate with investors and central/state government.

States are being ranked on investment attractiveness to compete for new investments, she said adding incentive schemes for the promotion of new champion sectors will be launched in sectors such as solar PV manufacturing and advanced cell battery storage.

As many as 3,376 industrial parts/estates/SEZs in 5 lakh hectares have been mapped on Industrial Information System (IIS). All industrial parks will be ranked in 2020-21, she said.

Earlier this week, Prime Minister Narendra Modi announced a cumulative package of Rs 20 lakh crore, nearly 10 per cent of GDP, to provide relief to various segments of the economy battered by the nationwide lockdown in the wake of the coronavirus pandemic.

While this included March 27 announcement of Rs 1.7 lakh crore package of free foodgrain and cash to poor for three months and RBI's Rs 5.6 lakh crore worth of monetary policy since March, the government in three tranches over the last three days announced a cumulative package of Rs 10.73 lakh crore.

The measures announced have largely been about liquidity with negligible extra budget spending. The three tranches provided for a variety of steps for small businesses, street vendors, farmers and poor migrants as well as shadow banks and electricity distributors, but they have largely been either credit guarantee schemes or new fund creations to be shouldered by banks and financial institutions.