New ₹20,000 Cr Risk Guarantee Fund Aims to Attract Private Infra Projects

The government is planning to set up a ₹20,000 crore "Risk Guarantee Fund" for encouraging infrastructure development. Its objective will be to attract private sector investment. The establishment of this risk guarantee fund will enable the private sector to pool project risks, lessening the burden on project developers. The fund would start with a size of ₹20,000 crore and might be operated by the National Credit Guarantee Trustee Company (NCGTC).

The development risk of new schemes will be paid for by the fund. In addition, developers will also have to hold a minimum stake and pay a risk-based charge. The fund will compensate for losses due to uncertainty and other non-business risks, providing incentives for lenders to lend more for big projects.

Amar Ujala sources said that this fund must be legally guaranteed by banks and must also guarantee timely payments. According to the National Infrastructure Pipeline (NIP) report, India will need to spend $4.51 trillion (approximately Rs 390 lakh crore) on infrastructure by 2030 to achieve the target of a $5 trillion economy by 2025 and continue its growth thereafter. India's ability to maintain high growth rates depends on the infrastructure sector. However, the country's weak infrastructure is failing to meet the needs of the growing economy and population.

A report by a task force led by the former Economic Affairs Secretary states that one of the biggest challenges to an ambitious program like "Make in India" is poor infrastructure, which supports the country's manufacturing capacity and job creation. The report also states that if the government fails to address the infrastructure gap, corporate growth and investment could be affected. According to experts, this gap contributes to a loss of 4-5 percent of India's GDP. Infrastructure development will not only contribute to economic expansion but also strengthen long-term growth.