Introduction:
The Viability Gap Funding (VGF) scheme, a Central Sector Scheme of the Government of India, is administered by the Department of Economic Affairs, Ministry of Finance.
It plays a crucial role in offering financial assistance to economically desirable yet commercially unviable infrastructure projects undertaken through Public-Private Partnerships (PPPs).
Body:
The scheme provides financial support in the form of grants, whether one-time or deferred, with the aim of rendering infrastructure projects commercially viable.
The revamped scheme has introduced higher VGF support, allocating up to 60% of the Total Project Cost (maximum 30% each by the
Central and State Governments) for social sectors like Water Supply, Waste Water Treatment, Solid Waste Management, Health, and Education.
For Pilot/Demonstration Projects in Health and Education sectors, the VGF support can go up to 80% of the Total Project Cost (maximum 40% each by the Central and State Governments).
Recent Examples:
- Battery Energy Storage Systems (BESS) Development: Scheme for Viability Gap Funding (VGF) supports the development of 4,000 MWh of BESS projects by 2030-31.
- Hydro-electricity Project: Viability Gap Funding has been instrumental in supporting hydro-electricity projects, enhancing the country’s renewable energy infrastructure.
- Regional Connectivity Scheme for Aviation: VGF is utilized for sub-20 seater planes flying to unserved and under-served airports, fostering regional connectivity in the aviation sector.
- Jawaharlal Nehru National Solar Mission (JNNSM): Viability gap funding is extended to solar power developers under JNNSM, promoting the adoption of sustainable energy sources.
- Establishment of Medical Colleges: The scheme facilitates the establishment of medical colleges, addressing the critical need for healthcare infrastructure in the country.
Conclusion:
The Viability Gap Funding scheme stands as a pivotal instrument in promoting infrastructure development, particularly in sectors that are economically unviable but crucial for the nation’s growth.
By offering financial support to projects in areas like renewable energy, aviation, and healthcare, the scheme contributes significantly to achieving the government’s developmental objectives.