Government Considers Rs 20,000 Crore Risk Guarantee Fund To Drive Infrastructure Investment: Report

The government is reportedly examining a proposal to establish a risk guarantee fund of Rs 20,000 crore aimed at boosting private participation in infrastructure development.

According to a PTI report, the fund is intended to share project risks, easing the financial load on developers and thereby attracting greater private sector investment.

The fund with the initial corpus of Rs 20,000 crore is likely to be managed by the National Credit Guarantee Trustee Company Ltd. (NCGTC) and would underwrite development risks associated with new projects.

In addition, safeguards are expected, including a mandatory minimum stake from developers and the possibility of charging risk-based premiums.

Officials indicated that the scheme would cover potential losses arising from policy uncertainties and other non-commercial risks, which often deter lenders.

By offering this assurance, the government hopes to encourage banks and financial institutions to extend larger loans for big-ticket projects.

For the mechanism to succeed, the fund's guarantee must be bankable and there must be assurance of payment in a timely manner, as per the report.

The move comes against the backdrop of India’s enormous infrastructure financing needs.

As outlined in the National Infrastructure Pipeline (NIP), the country would require an estimated $4.51 trillion (around Rs 390 lakh crore) in spending by 2030 to achieve the target of becoming a $5 trillion economy by 2025 and sustain high growth thereafter.

The NIP report highlighted that weak infrastructure remains one of the greatest challenges to India’s economic ambitions, with inefficiencies estimated to cost 4–5 per cent of GDP.

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