WHILE unveiling the recent budget, Finance Minister Nirmala Sithara man mooted the creation of a professionally supervised Development Finance Institution (DFI) to help fund India’s infrastructure. She said the government would establish a Rs 20,000crore DFI with the intention of assembling Rs 111 lakh crore for financing infrastructure. She also said the government had a target to have a loan portfolio of at least Rs 5 lakh crore in 36 months.
The DFI seems to be the main ingredient of the government’s thrust to generate jobs and enhance demand. The plan also comprises a capital expenditure plan of Rs 5.54 lakh crore for 2021-22. This was revised from Rs 4.39 lakh crore for 2020-21. The government budgeted for around 26 percent increase in capital expenditure, anticipating that the multiplier effect and resultant job creation would bring gross domestic product close to an 11 percent growth rate.
Debt funding through the Infrastructure Investment Trust and Real Estate Investment Trust will be allowed through relevant amendments. A bill for the setting up of DFI has been listed for the current Parliament session. It explains the Institution “as a provider, enabler and catalyst for infrastructure financing and as the principal financial institution and development bank for building and sustaining a supportive ecosystem across the life-cycle of infrastructure projects”.
This story is from the March 1, 2021 edition of India Legal.
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This story is from the March 1, 2021 edition of India Legal.
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