Government approaches World Bank for infrastructure funding facility

India has approached the World Bank to set up a global infrastructure facility (GIF) to help finance about $1 trillion of investments needed for projects in the sector.

“India has asked the World Bank to set up a GIF which will provide loans to infra projects. The World Bank is working on it as they feel the development of the sector is important,” a senior government official said.

The GIF would be set up with contributions from India, the World Bank, sovereign wealth funds and pensionfunds.

“The facility would benefit the SWFs and PFs as they would get higher returns by investing through GIF as compared to direct investment into projects,” the official added.

The move will also help to bridge the current account gap, which soared to an all-time high of 4.8 per cent ofGDP in fiscal 2012-13, putting pressure on the local currency.

The government has been making efforts to develop infrastructure such as roads, railways and ports. The investment needed in the sector in the five-year period ending March 2017 is estimated at $1 trillion, about half of which is expected to come from the private sector.

In order to promote long-term and low-cost funding for the sector, the government has allowed Infrastructure Debt Funds (IDF) as a new category of financial intermediaries to refinance loans.

Read more: Economic Times