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RELATEDARTICLES
Transportsectorlikelytogethigherviability
gapfunding

ETintheclassroom:Viabilitygap
funding

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June4,2007

ETBureau Mar25,2010,05.28amIST

Viabilitygapfundingforurbantransportsystem
maybe...

Whatisviabilitygapfunding?

September30,2008

Therearemanyprojectswithhigheconomicreturns,butthefinancialreturnsmaynotbeadequatefora
profitseekinginvestor.Forinstance,aruralroadconnectingseveralvillagestothenearbytown.Thiswould
yieldhugeeconomicbenefitsbyintegratingthesevillageswiththemarketeconomy,butbecauseoflow
incomesitmaynotbepossibletochargeuserfee.Insuchasituation,theprojectisunlikelytogetprivate
investment.Insuchcases,thegovernmentcanpitchinandmeetaportionofthecost,makingtheproject
viable.Thismethodisknownasviabilitygapfunding.

Urbantransportviabilitygapfundingmaybe
hikedto30%
January24,2008

INDEPTHCOVERAGE
WaterSupply
Vgf

SPOTLIGHT
InfyunderSikka

Howdoestheschemework?
VGFistypicallyprovidedincompetitivelybidprojects.UnderVGF,thecentralgovernmentmeetsupto20%
ofcapitalcostofaprojectbeingimplementedinpublicprivatepartnership(PPP)modebyacentralministry,
stategovernment,statutoryentityoralocalbody.Thestategovernment,sponsoringministryortheproject
authoritycanpitchinwithanother20%oftheprojectcosttomaketheprojectsevenmoreattractiveforthe
investors.PotentialinvestorsbidfortheseprojectsonthebasisofVGFneeded.Thoseneedingtheleast
BusinessofBrands
VGFsupportwillbeawardedtheproject.Theschemeisadministeredbytheministryoffinance.
Whicharetheeligiblesectors?
Projectsinanumberofsectorssuchasroads,ports,airports,railways,inlandwaterways,urbantransport,
power,watersupply,otherphysicalinfrastructureinurbanareas,infrastructureprojectsinspecialeco
nomiczones,tourisminfrastructureprojectsaregenerallyeligibleforviabilitygapfunding.Thegovernment
nowproposestoaddsocialsectorssuchaseducationandhealthtothelist.
Howdoesthegovernmentbenefit?

Sikkamakinginroadsinanalytics
andcloudspace
SinceSikkawasnamedCEOdesignate,theco
overthepastsixmonthshasseencloseto60%
riseinrecruitmentindataandanalyticsspace.
VishalSikkaurgesInfocionstobe'mindful
andcurious'
FeedbackfromclientstoinfluenceInfosys
appraisal

Thegovernmenthaslimitedresources.Itcanusethosefundstobuildeverythingonitsown,butsuchpublic
fundingwilltakeyearstocreatetheinfrastructurethatisneededtoachievehighergrowth.Throughviability
gapfunding,thesameamountoffundscanbeusedtoexecutemanymoreprojectsthroughprivate
Fabindia&Manyavar:India's
participation.VGFisinthatsenseaforcemultiplier,enablinggovernmenttoleverageitsresourcesmore
mostprofitableapparelcos
effectively.

Theyhaveemergedascountry'smostprofitable

Whathasbeenthesuccessrate?
apparelcosbyavoidingdiscounts,stayingaway
fromprimerealestateandmakingproductsin
Thegovernmenthassofarapproved199VGFsupportedprojectsinvolvinginvestmentofRs170,651crore
house.
bytheendofDecember2009.

Armani,Gucci,Versacestartclearancesales
early
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Readers'opinions(1)
Sortby: Newest | Oldest
Baidyanath(Mumbai)
25Mar,201011:39AM
Theexampleillustartedisnotclearinasenseitdoesn'tprovidethesourceofincomefortheprivateinvestor.

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