The cabinet committee on economic affairs today expanded the viability gap fund (VGF) scheme for social infrastructure with an outlay of Rs 2,100 crore over five years. VGF is given on a public private partnership model and has been confined to economic infrastructure projects so far. As much as Rs 6,000 crore would be given for economic infrastructure projects as VGF till 2024-25.
The scheme would have two parts. First would cater to areas such as waste water treatment, water supply, solid waste management.
These projects face bankability issues and poor revenue streams to cater fully to capital costs.
The projects eligible under this category should have at least 100 per cent operational cost recovery.
The Centre will provide a maximum of 30 per cent of total project cost (TPC) of the project as VGF and state government/sponsoring central ministry/statutory entity may provide additional support up to 30 per cent of TPC. The rest will come from the private sector, finance minister Nirmala Sitharaman told reporters after the Cabinet meeting.
The second part will support demonstration or pilot social sectors projects.
The projects may be from health and education sectors where there is at least 50 per cent operational cost recovery. In such projects, the Centre and the states together will provide up to 80 per cent of capital expenditure and up to 50 per cent of operation & maintenance (O&M) costs for the first five years.
The Centre will provide a maximum of 40 per cent of the TPC of the project. In addition, it may provide a maximum of 25 per cent of operational costs of the project in the first five years of commercial operations.
Since the inception of VGF scheme, 64 projects have been accorded final approval with a total project cost of Rs 34,228 crore and VGF of Rs 5,639 crore. Till the end of 2019-20, VGF of Rs 4,375 crore has been disbursed.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU