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India Infrastructure Project Development Fund Scheme

Focus: GS III: Indian Economy

Why in News?

Recently, to promote the Digital India initiative of the Government of India, the Infrastructure Finance Secretariat has launched the IIPDF Portal for submitting applications for consideration under IIPDF Scheme.

About IIPDF Scheme:

  •  It is a Central Sector Scheme which will aid the development of quality PPP projects by providing necessary funding support to the project sponsoring authorities, both in the Central and State Governments.
  • Funding under this scheme will be in addition to the already-operational Scheme for Financial Support to PPPs in Infrastructure, essentially a viability gap funding (VGF) scheme, notified in December 2020.
    • Under the VGF scheme, support is granted for PPP infrastructure projects that are economically justified but commercially unviable.
  • The IIPDF has been created with initial budgetary outlay by the Ministry of Finance, Government of India.
  • For providing financial support for quality project development activities to the States and the Central Ministries a corpus fund titled ‘India Infrastructure Project Development Fund’ (IIPDF), with initial contribution of Rs. 100 crore is being set up.
  • Although it is envisaged as a revolving fund and would get replenished by the reimbursement of ‘investment’ through success fee earned from successfully bid projects, should there be a need, it can be supplemented in subsequent years through budget support.
  • The IIPDF would assist ordinarily up to 75% of the project development expenses.
  • The assistance from IIPDF would ordinarily be in the form of interest free loan.
  • On successful completion of the bidding process, the project development expenditure would be recovered from the successful bidder.
  • The IIPDF’s primary objective would be to fund potential PPP projects’ project development expenses including costs of engaging consultants and transaction advisor, thus increasing the quality and quantity of successful PPPs and allowing informed decision making by the Government based on good quality feasibility reports.
  • The IIPDF will assist projects that closely support the best practices in PPP project identification and preparation as set out in guidance to be issued by the Department of Economic Affairs from time to time.

December 2023