The Finance Ministry notified a revamped viability gap funding scheme, at an outlay of ₹ 8,100 crore, under which, various infrastructure projects will be selected for financial support.

Viability Gap Funding (VGF) scheme: As part of the Atmanirbhar Bharat Package, the Ministry of Finance notified a revamped or updated viability gap funding (VGF) scheme on December 11, with an outlay of ₹ 8,100 crore, under which, various infrastructure projects will be selected for financial support. The move is aimed at driving private sector investment in social infrastructure. The Finance Ministry will administer the revamped central scheme, and the outlay is up to the financial year 2024-25 to boost the public-private partnerships (PPPs) in economic and social infrastructure.

Here's all you need to know about the government's revamped viability gap funding (VGF) scheme:

Revamped Viability Gap Funding Scheme - All You Need To Know:

  • According to the Ministry of Finance, the government will enhance the quantum of viability gap funding up to 30 per cent each of total project cost as the VGF by Centre and state or statutory bodies.
  • For other sectors, the VGF existing support of 20 per cent each from the government and states or statutory bodies will continue. The total outlay is ₹ 8100 crores. The projects are to be proposed by central ministries/ state government or statutory entities.
  • The enhanced viability gap funding up to 60 per cent of the total project cost is to be provided for social sectors such as water, waste management, health, education, etc.
  • The enhanced viability gap funding up to 80 per cent of the total project cost and 50 percent O&M (operations and maintenance) for the first five years is to be provided for demonstrations and pilot projects in health and education sectors.
  • The viability gap funding scheme will be known as the 'Scheme for Financial Support to PPPs' (Public-Private Partnerships) in the infrastructure sector.
  • The updated viability gap funding scheme will come into force with immediate effect, according to the Ministry of Finance. Regarding the eligibility, the project will be implemented by a private sector company and will be selected by the government or a statutory body through an open competitive bidding process.