No proposal for funding has so far been received by the company. Neither has IIFCL built the requisite professional expertise for selection of projects for funding. The criteria for selection of projects have not been finalised either.
Meanwhile, the government has cut the budgetary support for viability gap funding for infrastructure projects this fiscal to a pittance. Last Budget, finance minister P Chidambaram had provided an outlay of Rs 1,500 crore for this, which he said, would operate in conjunction with the special purpose vehicle. Given the fact that this model is yet to take off, the outlay was later slashed to Rs 50 crore.
In Budget 2005-06, Mr Chidambaram had taken two specific steps to assist infrastructure financingthe SPV and viability gap funding. The SPV was proposed to raise Rs 10,000 crore from the market with the cushion of a government guarantee. It was later clarified that the SPV is free to raise resources beyond the cap on the strength of its own balance sheet.
Constitution of a search committee to select the whole-time directors of the IIFCL is yet to take place. Given that the finance ministry has no enough internal competence on project appraisals, it is now planning to induct professionals.
The empowered committee for screening PPP projects in infrastructure for viability support hasnt sanctioned any big amount so far. The panel can sanction capital grants to PPPs up to Rs 200 crore per project Estimates suggest that funds to the tune of $150 billion would be required to bridge the glaring infrastructure deficit in the country.
At present, there are two models other than budgetary support for infrastructure financing. While a formal mechanism is in place for PPP projects, under viability gap funding, the government gives capital grant as last-mile finance.