Budget 2021-22 may confirm new opportunities for a development finance institution

With having an investment in infrastructure as the main shaft on which the government of Modi’s roadmap for post-COVID economic retrieval is based, Finance Minister Nirmala Sitharaman may declare plans to set up a new development finance institution (DFI) in the Union Budget of 2021-22, Moneycontrol confirmed. A new DFI will be a vital part of the government’s will to capitalize more in infrastructure and may be supported by particular measures to allow access to infrastructure financing easier, a prime government official mentioned on condition of anonymity.

Such a DFI is anticipated to be partway held by the government and would fund infrastructure projects that banks and other lenders are uncertain of funding due to long incubation periods. It is an option that the India Infrastructure Finance Company (IIFCL) could be integrated with the new DFI. The official confirmed with Moneycontrol that given the continuous drive for spending in infrastructure, India would need preferably a couple of development finance institutions. At least one of them could be declared in the budget. Senior bureaucrats along with Sitharaman and the finance ministry have said the Centre will raise infrastructure projects with a large multiplier impact, which will assist to achieve the twin aims of developing economic training and building jobs.

The official referred to above said there are a total of three affiliated parts to this plan. The first is for the Rs 109 lakh crore for national Infrastructure Pipeline at least 50 of the largest projects from the pipeline are living accelerated on a priority basis. The second is the government’s public spending and capital expenditure drive. Sitharaman has publicly announced that any financial problems will be held aside and the budget will have the prime focus on public spending. As reported earlier, the Centre’s CAPEX aim in the forthcoming budget could handily cross Rs 6-7 lakh crore.

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