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Finance ministry notifies viability gap funding scheme to support infra projects

11 Dec 2020 Evaluate

The finance ministry has notified the Viability Gap Funding (VGF) scheme under which infrastructure projects would be selected for financial support to give a push to the sector. As per the scheme notified by the ministry, funding up to Rs 200 crore will be sanctioned by the Empowered Committee (EC) headed by the economic affairs secretary, while projects needing over Rs 200 crore would be approved by the EC with the approval of the finance minister.

The other members of the EC would be NITI Aayog CEO, expenditure secretary, secretary of the line ministry dealing with the subject and joint secretary in the Department of Economic Affairs as member secretary. This scheme will be called the Scheme for Financial Support to Public Private Partnerships (PPPs) in infrastructure, it said, adding it will be a central sector scheme to be administered by the Ministry of Finance.

The scheme shall come into force with immediate effect. Regarding eligibility, it said the project shall be implemented by a private sector company to be selected by the government or a statutory entity through a process of open competitive bidding. For social sector projects, including water supply and solid waste management, the amount of VGF shall be equivalent to the lowest bid for capital grant subject to maximum of 30 per cent of the total project cost. For all other eligible sector projects, the amount of VGF shall be equivalent to the lowest bid for capital grant subject to maximum of 20 per cent of the total project cost.

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