India to Launch New Infrastructure Trust Fund
The Indian Finance Ministry is preparing to finalize the rules for a new Infrastructure Trust Fund, designed to expedite the flow of capital into critical infrastructure projects across the country. These projects encompass key sectors such as power, ports, and aviation, among others. The Ministry expects to complete the necessary legal and procedural steps for the fund's establishment within the next month.
The fund's structure is anticipated to mirror that of Real Estate Investment Trusts (REITs), a prevalent investment vehicle in other nations. It will issue units to both domestic and international investors interested in acquiring a stake once revenue-generating projects are transferred to the fund.
Addressing Infrastructure Funding Needs
This initiative by the Government of India addresses the increasing need for funding in the infrastructure sector. Projections suggest that the sector will require investments at a substantial level, with as much as a three-fold increase necessary within the coming two years. This fund attempts to address the anticipated increase in demand.
The concept of a dedicated Debt Fund was initially introduced in the Union Budget of 2011-2012. This debt fund aims to accelerate and augment the flow of long-term debt specifically earmarked for funding infrastructure projects that serve the public interest in India.
Projected Investment in Infrastructure
During a recent visit to Washington, Finance Minister P Chidambaram stated, "The total infusion for power, road, and civil aviation etc. in 12th plan period is expected at $ 1 trillion; nearly half of the amount is expected from the private sectors." This significant investment objective underscores the government's emphasis on infrastructure development and its expectation of substantial private sector participation. The government anticipates that this trust fund will play a significant role in attracting sufficient capital to meet these ambitious infrastructure development goals.