In order to boost the construction of low cost airports to meet the demand of air travel, Finance Ministry is preparing an agreement which will allow infrastructure debt funds (IDFs) to lend to firms developing airports on the basis of public-private-partnership (PPP) model.
According to new agreement, IDFs can reach out to the project promoters in case there is a problem with the developers. Project promoters are government organizations such as Airports Authority of India which awards projects to infrastructure companies (public or private contractors) on a PPP basis.
The government is planning to build nearly 200 low-cost airports in the next 20 years to expand connectivity to Tier-II and Tier-III cities. The non-metro airports presently account for only about 30% of the total air traffic, which is expected to increase to 45% in the next few years.
With an aim to boost the infrastructure development in the country, the government has set up IDF mechanism to allow refinancing of bank loans to infrastructure projects for longer toner at lower cost. Presently, infrastructure companies which implement infrastructure projects on PPP basis depend primarily on bank lending, which is not available for long term.