Bangalore, July 31 (IANS): India plans to set up a $10-billion infrastructure debt fund for long-term financing infrastructure projects across the country, Planning Commission Deputy Chairman Montek Singh Ahluwalia said late on Friday.
"The proposal is to initially have a $10 billion infrastructure debt fund. Though it may not solve the financing problem, it is going to demonstrate that such funds can work in India so that many more such funds can be set up for many infrastructure projects," Ahluwalia told IANS on the margins of an interactive session here.
The UPA government had recently set up a 15-member committee under the chairmanship of former HDFC chairman Deepak Parekh to work out the modalities of the proposed India Infrastructure Debt Fund (IIDF). The committee has come out on June 1 with a report on creation of a debt fund through low-cost long-term resources for re-financing infrastructure projects under the public-private partnership (PPP).
"The Finance Minister has asked me to talk to different stakeholders and make specific recommendations on whether the Parekh Committee Report is practical and what modifications in the regulatory system will be necessary, as such a fund does require some relaxations by the Reserve Bank of India (RBI) and the Securities Exchange Board of India (SEBI)," Ahluwallia said.
Noting that scaling the infrastructure was a major challenge facing the country, the Deputy Chairman said the Plan panel had recently made sweeping recommendations after a mid-term assessment of the various infrastructure projects, their funding and regulatory issues governing their execution.
"For instance, if you are going to raise funds abroad, it may be used to refinance short-term loans. Until recently, you could not borrow abroad to refinance. You could borrow for original investment. For funding infrastructure projects, the norms have to be relaxed to raise debt funds," Ahluwallia pointed out.
Earlier, addressing members of the Bangalore Chamber of Industry & Commerce (BCIC), Ahluwallia said the private sector would have to scale its contribution to $500 billion during the 12th plan (2012-2017) for funding infrastructure projects under PPP from $175 billion in the 11th plan (2007-12).
Admitting that infrastructure deficit was a major constraint in achieving over nine percent gross domestic product (GDP) growth rate annually, Ahluwallia said the government and the private sector had to do much more in the next five years than they have done in the last five years in terms of scale.
