The Infrastructure Finance Secretariat (IFS), part of India’s Ministry of Finance, has unveiled the India Infrastructure Project Development Fund (IIPDF) Portal. This is an online platform designed to streamline the application process for the IIPDF Scheme, which aids in the development of Public Private Partnership (PPP) projects. This move will support digitization measures under the Digital India initiative by minimizing paperwork, reducing processing times, and ensuring swift approvals.
IIPDF Scheme: Background and Restructuring
The IIPDF was initially formed within the Department of Economic Affairs (DEA), operating under the umbrella of the Ministry of Finance. The IIPDF started with a corpus of Rs. 100 crore to assist in the creation of PPP projects to be offered to the private sector.
The DEA has since restructured the existing fund, transforming the IIPDF into a Central Sector Scheme. It now possesses a total outlay of Rs.150 Crore earmarked for a period of three years from 2022-23 to 2024-25. These funds are now available to Sponsoring Authorities overseeing PPP projects to aid in covering project development costs. Each Sponsoring Authority must establish a PPP Cell to efficiently manage PPP project development activities and address broader policy and regulatory matters.
Objective and Significance of the IIPDF Scheme
The primary goal of the IIPDF Scheme is to offer financial backing for high-quality project development activities. The scheme enables Sponsoring Authorities to secure funding to offset a portion of the PPP transaction costs. As a result, the scheme lessens the impact of procurement-related expenses on their budgets.
IIPDF’s Financial Outlay
Under the scheme, the IIPDF contributes up to 75% of the project development expenses as an interest-free loan. The remaining 25% is co-funded by the Sponsoring Authority. The project development expenses are to be recovered from the successful bidder once the bidding process concludes. If the bid fails, the loan will be converted into a grant. Should the Sponsoring Authority choose not to conclude the bidding process for any reason, the entire amount contributed would be refunded to the IIPDF.
The Approval Committee: Administrators of the IIPDF Scheme
The IIPDF scheme is managed by an Approval Committee (AC) comprising the Joint secretary, DEA as the Chairperson, a representative from NITI Aayog, and the Deputy Secretory/Private Investment Unit, DEA acting as the Member Secretary.
Infrastructure Sector in India: Current Status and Future Outlook
Infrastructure development serves a crucial role in propelling India’s growth trajectory. It acts as a catalyst for economic progress across various sectors. Recognizing the importance of solid infrastructure, the Indian government has initiated several measures and invested heavily to accelerate progress.
According to estimates, India’s infrastructure sector is set to grow at a Compound Annual Growth Rate (CAGR) of 8.2% by 2027. The capital investment for infrastructure in Budget 2023-24 witnessed a 33% increase to Rs. 10 lakh crore
(USD 122 billion), accounting for 3.3% of the GDP. In the coming years, India is forecasted to emerge as one of the world’s largest economies, with a GDP ranging from USD 35 to 40 trillion by 2047. This notable increase from USD 3.5 trillion in 2022 signifies a rough doubling since 2010. Furthermore, the industrial output has surged by 56% since 2010, which has bolstered the pace of urbanization expected to pick up speed by 2047.
Government Initiatives for Infrastructure Development
The Indian government has launched several initiatives for infrastructure development, including the PM Gati Shakti Scheme, the National Infrastructure Pipeline, the Urban Infrastructure Development Fund, the National Logistics Policy, and the creation of Dedicated Freight Corridors. To achieve its 2025 economic growth target of USD 5 trillion, it is imperative for India to boost its infrastructure—particularly transport infrastructure including roads, railways, aviation, shipping, and inland waterways. To this end, India has plans to invest USD 750 billion in railway infrastructure and envisions significant investments in infrastructure development at Indian ports under the Maritime India Vision 2030. Additionally, an estimated investment of USD 840 billion over the next 15 years is required to meet the infrastructural needs of India’s rapidly growing urban population.