India Infrastructure Project Development Fund Scheme (IIPDF Scheme)
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Context
- The Department of Economic Affairs (DEA), Ministry of Finance, Government of India, has notified the Scheme for Financial Support for Project Development Expenses of PPP Projects – India Infrastructure Project Development Fund Scheme (IIPDF Scheme).
About
- As a central sector scheme, the IIPDF Scheme will aid the development of quality PPP projects by providing necessary funding support to the project sponsoring authorities in the central and state governments.
- Funding under IIPDF Scheme is in addition to the already operational Viability Gap Funding Scheme that provides Financial Support to PPPs in Infrastructure that is economically justified, but commercially unviable.
Note: In PPP, public and private stakeholders sign up to jointly develop, finance, execute and operate a (mostly) infrastructure project.
Must Read: https://www.iasgyan.in/blogs/forms-of-projects-modes-of-construction
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VGF Viability Gap Funding is designed to provide capital support to projects that are economically justified but not financially viable. In this incentive scheme, the Government provides a certain percentage of the total capital cost to make the project financially viable. VGF reduces the revenue required to recover costs and provides a financially attractive return for the private sector. |
Aim
- To improve the country's quality and pace of infrastructure development by encouraging private sector participation.
- The Scheme is for creating a shelf of bankable viable PPP projects to achieve the country's vision of modern infrastructure.
Advisory to PSAs
- A key step in structuring quality PPP projects is to provide quality advisory/consultancy services to the Project Sponsoring Authorities (PSAs). However, the procurement of such services is a time-consuming and difficult process often resulting in delays.
- There is a lack of appropriate transaction advisers (TAs) and there is non-optimal structuring of PPP projects.
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TAS Transaction advisory services (TAS) assist public and private sector clients in structuring and procuring viable projects, particularly public-private partnership projects. TAS can help guide the choice and design of a project, improve its quality, and enhance its acceptability to investors. |
- To address these issues, the Department of Economic Affairs (DEA) notified a panel of pre-qualified TAs in July 2022.
- Now, the IIPDF scheme will provide the necessary support to the PSAs, both in the Central and state governments. Financial assistance will be extended to meet the cost of transaction advisors and consultants engaged in developing PPP projects.
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