The latest estimates of the government today revealed that there is a shortfall of about Rs. 5,00,000 crore for financing power projects in the country.

“The power sector as a whole requires a huge investment and there is gap of around Rs. 5,00,000 crore in financing the power generation capacity addition projects”, the Minister of State for Power Bharatsinh Solanki said on Thursday while addressing India Electricity-2009 organised by FICCI.

Mr. Solanki said, “In order to achieve financial closure (of power projects) in a time bound manner it is suggested to increase the exposure limit of banks, foreign institutional investors and non-banking companies. The limit should be increased from 20 to 30 per cent for individual borrowers and 50 to 70 per cent for group borrowers.”

The minister also suggested, “external commercial borrowing by financial institutions like Power Finance Corporation and Rural Electrification Corporation may be brought under the automatic route (not requiring RBI approval).”

He pointed out, “the issue of threats of Chinese dumping, non-existence of level playing field, high cost of debt and disparity in taxes and duties are hampering the growth of this sector.”

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