Several major infrastructure projects with outlays to the tune of about Rs. two lakh crore could get a boost if Tamil Nadu’s suggestion for creating a new infrastructure fund at the national level were to get the Centre’s nod.
In a pro-active mode, Finance Minister O Pannerselvam has recently mooted to the Centre such a line of credit to States to provide “long-term finance” for 12 years and more to help execute mega infrastructure projects in the public-private partnership (PPP) mode.
The fund proposed could pool in resources from the “private sector financing wings” of multilateral agencies such as World Bank, Asian Development Bank and Japan International Cooperation Agency (JICA), besides from sovereign funds, overseas pension funds and insurance funds, the State has told the Centre.
The major infrastructure projects lined up for Tamil Nadu in areas such as industry, highways and ports, include the Madurai-Tuticorin; Salem-Coimbatore; Chennai-Ranipet and Ranipet-Hosur industrial corridors projects, six/eight lane triangular corridors (Chengalpattu-Tuticorin, Tuticorin-Coimbatore and Coimbatore-Chengalpattu) and development of ports in Cuddalore, Nagapattinam and Manappad regions. All these projects are to be executed through PPP mode, as envisaged in Chief Minister Jayalalithaa’s ‘Vision Tamil Nadu 2023’ document. On the whole, the document refers to projects involving a total investment of Rs. 15 lakh crore in different critical sectors which can be implemented through various modes including the public sector and the private sector.
Explaining the rationale behind the suggestion made at the State Finance Ministers’ meeting with Union Finance Minister Arun Jaitley a few days ago, official sources say the idea is to tap long-term finance. At present, developers have to approach a consortium of lenders and invariably they encounter serious challenges in raising adequate funds. The problem gets compounded when interest rates remain quite high. Under such circumstances, the presence of an infrastructure fund would be handy. Also, no State government can meet the huge financial requirements only through the conventional method of tax collections.
The suggestion has been made, keeping in mind twin purposes – making available greater amount of funds for infrastructure projects and ensuring accelerated execution of such projects, the sources said.
Another reason for mooting the new funding pattern is that the present system of getting assistance through the India Infrastructure Finance Company (IIFC) has not helped Tamil Nadu. Mr. Pannerselvam had explained at the meeting with Mr. Jaitley that the IIFC route of ‘Takeout Finance Scheme’ was more aimed at bailing out banks and financial institutions.
Asked whether any project in the State has been hit by lack of financial resources, the official sources replied in the negative.