Facing flak over the economic slowdown, the government is likely to activate the finance consortium that it set up in January for infrastructure projects of over Rs 1,000 crore.
The consortium between India Infrastructure Finance Company Ltd, Life Insurance Corporation and seven public sector banks including the State Bank of India (SBI), Punjab National Bank and Bank of Baroda would act as a single-window access to multiple lenders, for developers. It has not been effectively activated, though a memorandum of understanding was signed on forming it in January.
India’s growth rate slipped to 6.5% for 2011-12, much below expectations, and investment rate in the country dropped to 29.5% in 2011-12 from 30% in the previous fiscal. Several mega projects have been failed to take off due to regulatory and policy paralysis.
“The issue has been discussed between banks and senior finance ministry officials and steps would be taken to activate the consortium at the earliest so that financing into big projects is not choked,” a senior government official who did not wish to be identified told Hindustan Times. The official said several issues need to be addressed before the consortium could be activated.
It is proposed that 20% of the project cost would be borne by IIFCL, while the lead bank for financing the rest of the cost would be decided by a group of senior officers from the consortium.
Earlier, Prime Minister Manmohan Singh, who is acting as finance minister, gave his nod for setting up of an investment tracking system to ensure speedy and timely implementation of all mega projects with outlay of over Rs 1,000 crore.
The timely implementation of public sector projects would also be tracked by the National Manufacturing Competitiveness Council while the department of financial services would monitor private sector projects.