U'khand to fund viability gaps

For attracting private players in physical and social sector infrastructures in Uttarakhand, the finance department has proposed a new scheme where the state government can fund up to 50 per cent to various projects in public-private partnerships (PPP) in order to make them viable.

The draft of the proposed Uttarakhand Infrastructure Viability Gap Funding (VGF) scheme is in the final stages, which would be shortly put before the state cabinet.

Under the VGF scheme for physical infrastructure, the projects such as roads, bridges, airports, power, SEZ in designated industrial areas and others have been included. And for social sector, the projects include educational institutes, schools, health, agriculture, forestry and environment protection.

In order to bring private sector, corporate and institutional resources as well as techno managerial efficiencies, the finance department is of the view that financial viability of unviable projects can be improved through government support.

“Some projects which are not financially viable because of difficult terrain, limited clientele, long gestation periods and limited financial returns, their viability can be improved through the government funding,” said Principal Secretary (Finance) Alok Jain, who is finalising the proposal.

For this purpose, the department has also proposed to set up an empowered committee to consider the various proposals coming under the VGF scheme. While the chief secretary will head the committee, PPP cell of the planning department will work as secretariat of the scheme.

According to the draft of the scheme, the proposal of a VGF project would be prepared by the department concerned and submitted to the secretariat.

The approval of the committee can be taken in case the gap funding is less than Rs 5 crore. In case, the gap funding is more than Rs 5 crore, the approval of the chief minister must also be taken.

The need of the new scheme was felt as the development of physical and social infrastructure projects require very large investment that my not be possible for the government to fund from the state budget alone.