Funding Rs 102 Lakh Crore National Infrastructure Pipeline: Govt To Introduce Bill To Set Up A New Infra Financing Bank

Funding Rs 102 Lakh Crore National Infrastructure Pipeline: Govt To Introduce Bill To Set Up A New Infra Financing Bank
Nirmala Sitharaman, Minister of Finance.

In a potentially transformative move that could help significantly bridge the funding requirements for the infrastructure projects identified under the ambitious Rs 102 lakh crore (US$1.4 trillion) National Infrastructure Pipeline, the Union government will be set up a new development finance institution (DFI).

The government will introduce the National Bank for Financing Infrastructure and Development Bill, 2021 in the current Budget session.

“To set up a new DFI as a provider, enabler and catalyst for infrastructure financing and as the principal financial institution and development bank for building a supportive ecosystem,” the list for legislative business for the ongoing Parliamentary session stated.

The bill is expected to outline the design of the DFI in terms of its institutional form, ownership, source of funds, nature of financing, and governance structure.

On 23 August 2019, the Union Finance Minister Nirmala Sitharaman, while announcing a series of measures to revive economic growth, had mooted the proposal to establish a new Development Finance Institution (DFI) to address the country’s infrastructure financing needs.

The Union Finance Minister said “In order to improve access to long-term finance, it is proposed to establish an organisation to provide credit enhancement for infrastructure and housing projects, particularly in the context of India now not having a development bank and also for the need for us to have a institutional mechanism. So, this will enhance debt flow toward such projects."

Subsequently, on December 31, 2019, the Government of India announced a five-year Rs 102 lakh crore National Infrastructure Pipeline (NIP), prioritising energy, transport, and urban development. Under the NIP state and central governments expected to bear 78% of the financing,with the rest coming from private investors.

Also Read:

Explained: Why India Needs A New Development Finance Institution