India Infrastructure Development Fund

19-06-2023

Latest Context

The Infrastructure Finance Secretariat (IFS), under the Ministry of Finance, has launched the India Infrastructure Project Development Fund (IIPDF) Portal to support the Digital India initiative. Its online platform permits the submission of applications, facilitating timely approvals, reducing processing time, and paperwork under the IIPDF Scheme

Infrastructure Project Development Fund (IIPDF) Scheme

Background: To support the development of Public Private Partnership (PPP) projects that can be offered to the private sector, IIPDF was created in the Department of Economic Affairs (DEA), Ministry of Finance, Government of India with an initial corpus of Rs. 100 crores.
Introduction: As a part of the Central Sector Scheme with a total outlay of Rs.150 Crore for a period of 3 years from 2022-23 to 2024-25, DEA has restructured the existing fund IIPDF. It is given to the Sponsoring Authorities for PPP projects to incur the project development costs. Under it, Sponsoring Authority is required to create and empower a PPP Cell to undertake PPP project development activities and resolve the larger policy and regulatory issues.
Objective: Its objective is to provide financial support for quality project development activities.
Significance: Under it, the Sponsoring Authority will be in a position to source funding in order to cover a portion of the PPP transaction costs thereby reducing the impact of costs related to procurement on their budgets.
Financial Outlay: Under IIPDF, 75% of the project development expenses will be given to the Sponsoring Authority as an interest-free loan and the rest 25% will be co-funded by the Sponsoring Authority. The project development expenditure would be recovered from the successful bidder after completing the bidding process. The loan would be converted into a grant in the case of the failure of the bidding process. The entire amount would be refunded to the IIPDF in case the Sponsoring Authority does not conclude the bidding process for some reason.
Approval Committee (AC): The approval Committee administers the IIPD that has the following composition
Joint secretory, DEA is the Chairperson of IIPD
Representative of NITI Aayog
Its Member Secretary will be the Deputy Secretary/Private Investment Unit

Current Status of the Infrastructure Sector of India

Introduction: By acting as a catalyst for economic development across various sectors, infrastructure development plays a crucial role in India's growth trajectory. By recognizing the significance of robust infrastructure, the Indian government has launched several initiatives and investments to drive progress.
Current Market Size and Outlook: From a future point of view, the infrastructure sector. It is expected that is poised to grow at a CAGR of 8.2% by 2027 in India.

In Budget 2023-24, the capital investment outlay for infrastructure is being increased by 33% to Rs. 10 lakh crore (USD 122 billion), accounting for 3.3% of GDP.
In the world by 2047 with a GDP of about USD 35- 40 trillion as per CII (Confederation of Indian Industry) estimates of about USD 3.5 trillion in 2022, India is expected to be one of the largest economies
Since 2010. the country’s industrial output has increased by 56%, which has supplemented the pace of urbanization which is expected to accelerate by 2047.

Government Initiatives:

Urban Infrastructure Development Fund
National Logistics Policy
Dedicated Freight Corridors
PM Gati Shakti Scheme
National Infrastructure Pipeline

Way Forward

To achieve its 2025 economic growth target of USD 5 trillion, India has to increase its infrastructure. Improved transport infrastructure, including investments in roads, railways, aviation, shipping and inland waterways is required for India’s high population growth and economic development.
To strengthen railway infrastructure and envisioned the Maritime India Vision 2030 which estimates massive investments in world-class infrastructure development at Indian ports, the government of India has also suggested an investment of USD 750 Billion.
As per estimation, India needs to invest USD 840 billion over the next 15 years into urban infrastructure in order to cater for the needs of its fast-growing population. It will be rational as well as sustainable only when if we additionally focus on long-term maintenance and strength of our buildings, bridges, ports and airports.