Topics Covered: Infrastructure.
Centre to set up development finance entity:
The government plans to set up a Development Finance Institution (DFI) in the next three to four months.
- In her last Budget speech, Finance Minister Nirmala Sitharaman had proposed to set up DFIs for promoting infrastructure funding.
- To mobilise the ₹111 lakh crore required for funding of the ambitious national infrastructure pipeline.
- To enhance credit rating of projects. It would fund projects where others are not willing to enter because of the risks involved.
DFIs in India- Historical background:
DFI would have a key developmental role apart from the financing role.
- Prior to liberalisation, India had DFIs engaged in development of industry.
- ICICI and IDBI, in their previous avatars, were DFIs.
- The country’s oldest financial institution IFCI Ltd. too had acted as a DFI.
About national infrastructure pipeline:
In the budget speech of 2019-2020, Finance Minister announced an outlay of Rs 100 lakh Crore for infrastructure projects over the next 5 years.
- NIP is a first-of-its-kind initiative to provide world-class infrastructure across the country and improve the quality of life for all citizens.
- It will improve project preparation, attract investments (both domestic & foreign) into infrastructure, and will be crucial for attaining the target of becoming a $5 trillion economy by FY 2025.
- Covers both economic and social infrastructure projects.
- Investment needed: ₹111 lakh crore over the next five years (2020-2025) to build infrastructure projects and drive economic growth.
- Energy, roads, railways and urban projects are estimated to account for the bulk of projects (around 70%).
- The centre (39 percent) and state (40 percent) are expected to have an almost equal sharein implementing the projects, while the private sector has 21 percent share.
- Aggressive push towards asset sales.
- Monetisation of infrastructure assets.
- Strengthening the municipal bond market.
- What is NIP? When was it launched?
- Projects covered under NIP.
- Key recommendations made by task force headed by Atanu Chakraborty on NIP.
- Three committees proposed to be set up as per the recommendations made by Task Force.
- What is India Investment Grid?
Discuss the significance and features of NIP.
Sources: the Hindu.