Andhra Pradesh moots Rs 20,000-crore VGF corpus for infrastructure projects

Amaravati, Nov 15 PTI Andhra Pradesh government on Monday proposed that a Rs 20,000-crore viability gap funding VGF corpus be created on the lines of the National Investment and Infrastructure Fund to improve viability for large infrastructure projects.A token assistance of Rs 20,000 crore in the form of VGF at the Centre will create a great impact by firming up 10 strategic projects with a consolidated investment potential of about Rs 5 lakh crore.

Amaravati, Nov 15 (PTI): Andhra Pradesh government on Monday proposed that a Rs 20,000-crore viability gap funding (VGF) corpus be created on the lines of the National Investment and Infrastructure Fund to improve viability for large (infrastructure) projects.

"A token assistance of Rs 20,000 crore in the form of VGF at the Centre will create a great impact by firming up 10 strategic projects with a consolidated investment potential of about Rs 5 lakh crore. It will not only create numerous employment opportunities but also trigger spin-off developmental activities across sectors in the country, leading to a five trillion USD economy," the State government noted.

VGF grant may be provided to the States from the corpus for projects shortlisted in consultation with the respective governments, it suggested.

State Finance Minister Buggana Rajendranath mooted the proposal at the virtual conference conducted by Union Finance Minister Nirmala Sitharaman on stepping up investment, infrastructure and growth in the country as the economy has been on a growth path, post the Covid-19 second wave.

The conference discussed State-specific economy-related challenges and strengths, along with steps required for coordination between the State governments and the Central government to step up investment, infrastructure and growth.

"Shortfall in investment, coupled with lack of viability and other reasons, is leading to stalling of many strategic projects either in conceptualisation or implementation. This is severely impacting the developmental objectives of the State and Central governments," Andhra Pradesh government told the Union Finance Minister.

Though the State and Central governments tried to address the problem through innovative project financing options like public-private partnership, VGF, multi-lateral financing and infrastructure bonds, they did not yield the desired results, the State pointed out.

"The Central government may consider introducing a new VGF mechanism for large projects and encourage private sector participation. A cap of Rs 1,500 crore to Rs 2,000 crore per project may be considered for assistance (through the VGF corpus)," the State added.

Citing the case of the proposed Rs 39,200-crore HPCL-GAIL petro complex project at Kakinada, the State government said it was stuck for the past three years for want of VGF of Rs 5,700 crore.

"With the latest amendment to the corporate tax structure, the VGF requirement for this has come down to Rs 1,200 crore," it pointed out and sought the Centre's grant to kick-start the project.

The massive petro project, if materialised, could attract an investment of Rs one lakh crore into Andhra Pradesh, it added.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)