Govt’s Viability Gap Funding Scheme to Boost Infra

The Viability Gap Funding (VGF) scheme has been notified by the Finance Ministry under which infrastructure projects would be selected for financial support. As per the VGF scheme notified by the Finance Ministry, the Empowered Committee (EC) headed by the economic af

BY Realty Plus
Published - Monday, 14 Dec, 2020

Govt’s Viability Gap Funding Scheme to Boost Infra

The Viability Gap Funding (VGF) scheme has been notified by the Finance Ministry under which infrastructure projects would be selected for financial support. As per the VGF scheme notified by the Finance Ministry, the Empowered Committee (EC) headed by the economic affairs secretary will sanction funding up to an amount of Rs 200 crore, while projects requiring over Rs 200 crore would be approved by the Empowered Committee with Finance Minister’s approval. The other members of the Empowered Committee would be CEO of NITI Aayog, expenditure secretary, line ministry’s secretary dealing with the subject as well as joint secretary in the Department of Economic Affairs as member secretary. VGF scheme will be known as the Scheme for Financial Support to PPPs (Public Private Partnerships) in the infrastructure sector. This scheme will be a central sector scheme to be administered by the Finance Ministry. VGF scheme shall come into force with immediate effect. Regarding the eligibility of a project, it shall be implemented by a private sector company. The selection of the private sector company will be done by the government or a statutory entity through an open competitive bidding process. For projects belonging to the social sector, including water supply as well as solid waste management, the VGF amount shall be equivalent to the lowest bid for the grant of capital. This will be subject to a maximum of 30 per cent of the project’s total cost. For projects belonging to all other eligible sectors, the financial support amount of VGF shall be equivalent to the lowest bid for the grant of capital subject to a maximum of 20 per cent of the project’s total cost.