17-11-2020 | 13:54 PM
Viability Gap Funding
Context:
The Cabinet Committee on Economic Affairs approved the extension and revision of the Public Private Partnership Financial Assistance System for Infrastructure Viability Gap Funding till 2024-25.
Key highlights:
The goal of this scheme is to encourage public private collaborations in the social and economic infrastructure for the efficient development, proper operation and conservation of assets and to make economically and socially vital projects commercially viable.
The grant would cater to social sectors such as water management, wastewater disposal, sanitation and education.
About Viability Gap Funding:
The lack of a means of funding is a big problem facing the infrastructure sector in India. Certain infrastructure programmes can not be commercially feasible, but they are politically justified. These ventures are usually long-term and development-oriented.
The support for Feasibility Gap was planned to effectively execute such initiatives. Viability Gap Financing funds initiatives that are politically justified but not financially feasible.
VGF Scheme:
It was introduced in 2004 primarily to support initiatives that fell under the framework of the PPP model.
In 2006, the Department of Economic Affairs, Ministry of Finance, launched the System for financial assistance for PPPs in Infrastructure (Viability Gap Funding Scheme) with a view to promoting infrastructure projects conducted in the PPP mode.
Fourth Tranche of Atma Nirbhar Bharat Abhiyan:
The goal was to increase investment in eight main industries, such as coal, defence, minerals, power delivery, civil aviation, social infrastructure, space and nuclear energy. It is part of the Rs 20 crore economic stimulus package announced to deal with COVID-19.
