The Government on Thursday said there may be a shortfall of $300 billion in funding requirements for infrastructure during the 12th Plan, and financial institutions will have to make extra efforts to bridge the gap.
“Availability of long-term resources to meet investment requirement in infrastructure is key challenge. According to estimate, there may be a gap of 30 per cent in debt financing in 12th plan which is about $300 billion,” Finance Minister Pranab Mukherjee said here.
He was speaking at a function to launch the credit enhancement scheme of India Infrastructure Finance Company (IIFCL).
The government envisages infrastructure investment of $1 trillion in the 12th Five Year Plan beginning April 2012, up from the estimated $500 billion in the 11th Plan.
“There is a need to develop new instruments for improving financing of infrastructure projects in the country. IIFCL through this product will provide opportunity for long term fund from insurance and pension fund. These mechanism will help in development of infrastructure bond market,” he said.
Coming together of IIFCL, LIC, HUDCO and seven major PSU banks would create a mechanism to facilitate faster availability of funds for infrastructure projects, he added.
Earlier, the financial institutions, which also include lenders like SBI, PNB, Bank of Baroda, Bank of India and Canara Bank, had signed an MoU to create a mechanism for direct financing of infrastructure projects.
As part of the credit rating enhancement scheme, IIFCL would provide opportunity to infrastructure projects to obtain long term fund from insurance and pension companies. “These mechanism would help in development of infrastructure bond market,” Mukherjee said.
