Bangalore: A fund of $10-billion (over 50,000 Crore) has been fixed by the government for infrastructural development. An agreement with the Infrastructure Debt Fund (IDF) to provide financing on infra-projects has been confirmed. Foreign banks and a multilateral financial agency will contribute 50 percent of financial lending, whereas, the rest of the contribution will be made available by public sector institutions to promote investment.

A proposed plan has been made to set up an NBFC (a non-banking finance company) which will aid the fund. The major financial institutions who will participate for its establishment are India Infrastructure Finance Company (IIFCL), IDBI Bank, HSBC Life Insurance Corporation (LIC) and Asian Development Bank.

An amount of $1 billion (over Rs 5,000 Crore) is expected to be the initial collection for funding while 50 percent of it will be contributed by the state -owned finance institutions,including HSBC and ADB,who will contribute the rest of the capital. An appeal to the Finance Ministry has been sent to urge the ADB (Asian Development Bank) to cater for finance which will aid the development process. It has been known from sources close to the project development plan that NDFC will conduct its regular banking operations with HSBC as it is believed that private financial institutions are more efficient to manage the capital.

The Govt. made a choice on NBFC rather than going for a mutual fund for a rapid progress in the development plan. The mutual fund option was previously favored by the IDBI owing to the fact that the IIFCL will fund the projects brought under the public-private partnership (PPP) plan as a mandate.

The Govt. is seeking a formal announcement of the budget plan as it is eager to bring forth its own strategy to speedup up the development process, which appears to be a blockade in the realization of the infra-development method. Although it has been a long time that the proposed funding plans from IDF has been revealed (in the last budget), but only a handful of private financial institutions have turned up for the financial aid (NBFC ) set-up.

However, it is being apprehended by most of the financial institutions that lack of productive projects and the supply of various infrastructural inputs are the crucial factors which might further slowdown the process of development of the infrastructural plan.

Commenting on the infra-plans, the Managing Director of IDFC, Rajiv Lall stated that owing to the growing uncertainty of proper infra structural tools the IIFCL firm has discontinued its funding to thermal power project as stated by Times of India.

Due to the govt. inability to arrange for sufficient supply of fuel, most of the coal-based power projects were on hold. Other factors such has land acquisition, deforestation, has greatly played their roles in the further delay of realization of other project plans. The new proposed contracts are being further weakened by ongoing corruption scandals due to which the government is finding it difficult to get hold on award of new contracts. Contracts are limited for other infra sectors too such as ports while Infrastructure related to road transport sector currently serves the only hope in terms of contract awarded at the best possible price rate.