To boost infra creation, the Centre will move a special legislation which will enact a public sector development finance institution (DFI) besides enabling private players to enter this niche financial segment.

In a conversation with IANS, the Finance Ministry’s Chief Economic Advisor Krishnamurthy Venkata Subramanian talked about the vital facet of Union Budget 2021-22.

A development finance institution provides risk capital for key infra projects. It is considered as a key ingredient for a sustainable and fast infra creation.

On Monday, Finance Minister Nirmala Sitharaman proposed creation of a DFI to accelerate investment in infra sector.  However, contrary to the general perception the Centre will also allow private players to enter the field.

This, said the CEA will be done via a special legislation and under RBI’s enabling license provisions. Notably, the DFI is seen as a major policy decision in the BudgetFY22 which itself focuses on higher Capex spend on infra creation.

Sitharaman has announced to set up the DFI with a Rs 20,000 crore corpus. The Budget FY22 is pin-pointedly focused on infra generation to trigger economic growth.

The Finance Minister has proposed to raise the FY22 Capex by around 35 per cent to Rs 5.54 crore.

Additionally, the Centre is targeting to invest Rs 111 lakh crore till 2025-26 for the infra sector under its National Infrastructure Pipeline (NIP) programme.

The DFIs are expected to pick-up a major tab of this fiscal spending for targeted investment. It is felt that one DFI in public sector would not be enough to meet the huge investment requirement and so entry of private players will aid such investment.

(The story has been published via a syndicated feed.)

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