SPV to leverage Rs 20k-30k cr investments

NEW DELHI: The Special Purpose Vehicle to be set up in the next 4-6 weeks for funding infrastructure development will be able to leverage Rs 20,000-30,000 crore of investment, Finance Minister P Chidambaram said here on Saturday.

"I have set aside Rs 1,500 crore for viability gap funding. We hope to raise Rs 10,000 crore lendable resources through this SPV," he said at Assocham post-budget meeting.

"I think if all of us work together, we should be able to leverage investments of about Rs 20,000-30,000 crore, which will be in addition to normal expansion of credit and investment," the Finance Minister said.

Stressing that government alone cannot develop infrastructure, he said the SPV, announced in the Union Budget for 2005-06, would fund private and public sectors as well as joint ventures between the two.

"I hope the SPV will be up and running in 4-6 weeks," he said, adding the banks would provide short-term loans up-to five years, while the SPV would lend for 12-14 years.

The projects would be appraised by an Inter-Institutional Group of banks and financial institutions. The SPV will lend funds, especially debt of longer term maturity, directly to eligible projects to supplement other loans from banks and financial institutions.

Government will communicate the borrowing limit to the SPV at the beginning of each fiscal. For 2005-06, the Finance Minister had fixed the borrowing limit at Rs 10,000 crore.

He said the government saw potential for investments in road, seaports, airports and tourism sectors and if India Inc had any sectors to specify, the Centre was more than willing to accommodate those views.

On the Investment Commission, headed by Tata group chairman Rata Tata, Chidambaram said the exercise of assessing the investment goals and obstacles in achieving the goals of various sectors was underway.

“Once the Commission brings to the notice of the Centre the obstacles faced by various sectors in it is our business to either take a policy decision required to get over the obstacles or to make the administrative machinery more effective."

He said Tata had already held discussion with sectors like gems and jewellery and apparel.

Chidambaram drew the attention of the industry to textile cluster approach and PURA (Providing Urban Amenities in Rural Areas) clusters, undertaken by Ministry of Textiles and the National Commission for Unorganised Sector respectively.

Noting that "the cluster approach holds great promise", he said the country could have sector and product-specific clusters.

Observing that cluster approach could be successful only in Tirupur (Tamil Nadu), Chidambaram said "I wish we could get success in Jalandhar, Ludhiana, Moradabad, Kanpur, Aurangabad, Bangalore, Chennai and Kolkata."

He said the identification of cities and towns and sector-specific clusters could be done through public-private partnership.