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Scenario of Viability Gap Funding (VGF) Concept in Indian Infrastructure Projects

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  • Hiren Maniar

Abstract

Infrastructure is a key area since it provides the main thrust and impetus area in the growth of a developing nation like India. A major area of concern for sustaining the real gross domestic product (GDP) growth in India has been the lack of adequate infrastructure, which can support the growth process. The deplorably low levels of public investment have rendered India’s physical infrastructure incompatible with large increases in the national product. Clearly, without improving the rate of infrastructure investment, the expected growth rate of 9 per cent and above at best would remain modest. The Planning Commission of India has estimated that investment in infrastructure sector defined broadly to include road, rail, air and water transport, electric power, telecommunications, water supply and irrigation will need to be of the order of about ₹45 lakh crores or US$1.4 trillion during the 12th Five-year Plan period. India has one of the largest road networks in the world, aggregating around 33 lakh km; historically, the budgetary resources from the governments have been the major source of financing for infrastructure such as road projects in India. This article focuses on Viability Gap Funding (VGF) that has been used for financing of infrastructure projects and specially for road projects in India. The purpose of this article is to examine and analyse viability of the VGF scheme for Indian road projects by studying projects being covered under the VGF option.

Suggested Citation

  • Hiren Maniar, 2013. "Scenario of Viability Gap Funding (VGF) Concept in Indian Infrastructure Projects," Journal of Infrastructure Development, India Development Foundation, vol. 5(1), pages 33-65, June.
    • Handle: RePEc:sae:jouinf:v:5:y:2013:i:1:p:33-65
    DOI: 10.1177/0974930613488295
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    References listed on IDEAS

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    1. Planning Commission, 2006. "An Approach to the 11th Five Year Plan: Towards Faster and More Inclusive Growth," Working Papers id:569, eSocialSciences.
    2. Duvvuri Subbarao, 2009. "Should Banking Be Made Boring? - An Indian Perspective," Working Papers id:2307, eSocialSciences.
    3. Morris, Sebastian, 2001. "Issues in Infrastructure Development Today: The Interlinkages," MPRA Paper 24427, University Library of Munich, Germany.
    4. Mr. James P Walsh & Jiangyan Yu & Mr. Chanho Park, 2011. "Financing Infrastructure in India: Macroeconomic Lessons and Emerging Market Case Studies," IMF Working Papers 2011/181, International Monetary Fund.
    5. Mr. Etienne B Yehoue & Miss Mona Hammami & Jean-François Ruhashyankiko, 2006. "Determinants of Public-Private Partnerships in Infrastructure," IMF Working Papers 2006/099, International Monetary Fund.
    6. World Bank, 2004. "Study on Private Participation in Infrastructure in Tunisia," World Bank Publications - Reports 14408, The World Bank Group.
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    More about this item

    Keywords

    Infrastructure; Planning Commission; investment; GDP; VGF; road projects;
    All these keywords.

    JEL classification:

    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services

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