Core sector SPV proposed

After much coaxing and months of discussion, the Government of India is finally veering around to the idea of using its overflowing forex coffers to finance the humongous investment needs of the infrastructure sector.

It is planning to float a special purpose vehicle (SPV) in London that will see participation from both the government and the private sector.

Says Vinayak Chatterjee, Chairman, Feedback Ventures: “Many countries are using their foreign exchange creatively. Financing infrastructure through such means is a good idea.”

Under the plan, several incentives are proposed for the private sector, including launch of two venture funds with representatives from heavyweights such as Blackstone Group, India Infrastructure Finance Company and Infrastructure Development Finance Corporation on the board, development of the corporate bond market, introduction of PPP (public-private partnerships) projects and setting up of PPP cells in central ministries.

The requirements of the infrastructure sector have shot up from $300 billion two years ago to $495 billion at present. Says Chatterjee: “The government can't raise this amount on its own. So, it is keen on exploring public-private partnerships wherein it can pool in limited public-sector resources with private resources.”