Infrastructure push: Government mulls Rs 20,000 crore risk guarantee fund; aim to boost private investment

The government is considering setting up a Rs 20,000 crore risk guarantee fund to encourage private sector participation in infrastructure projects, according to PTI sources. The proposed fund aims to share project risks, easing financial pressure on developers and boosting private investment. The sources said the National Credit Guarantee Trustee Company (NCGTC) is likely to manage the initial corpus, which would cover risks linked to new project development. Safeguards under consideration include mandatory minimum equity contribution from developers and premium charges linked to project risk profiles. The fund would also provide protection against losses from policy changes and non-commercial risks, which could encourage banks and financial institutions to extend larger project loans. Its success, sources noted, will depend on the credibility of guarantees and prompt claim settlement. The move comes against the backdrop of India’s massive infrastructure requirements. The National Infrastructure Pipeline (NIP) report estimates that the country needs $4.51 trillion (about Rs 390 lakh crore) in investments by 2030 to sustain growth momentum and achieve its $5 trillion economy target. The task force behind the NIP, led by the former Economic Affairs Secretary, had warned that infrastructure quality is a major barrier to the government’s Make in India programme. It highlighted that inefficiencies due to inadequate infrastructure cost the economy 4-5 per cent of GDP annually, posing risks to corporate growth and investment. Experts believe that expanding and upgrading infrastructure will not only reduce these inefficiencies but also enhance competitiveness, support manufacturing and employment, and ensure long-term economic growth.