Social infra PPPs eligible for viability gap funding

The government on Wednesday expanded the provision of financial support by means of viability gap funding for public private partnerships (PPPs) in infrastructure projects to include critical social sector investments in sectors such as health, education, water and waste treatment.

The Cabinet Committee on Economic Affairs approved the continuation of the scheme for financial support to PPPs in infrastructure that has been in place since 2006, till 2024-25, Finance Minister Nirmala Sitharaman said, stressing that the scheme had been revamped.

“The viability gap funding [VGF] provided for economic infrastructure will now be extended to social infrastructure, ”Ms. Sitharaman said. A total of ₹ 8,100 crore has been allocated under this programme between 2020-21 and 2024-25, of which ₹ 2,100 crore will be devoted to social sector projects.

“Now, under two new schemes, private sector projects in areas like waste water treatment, solid waste management, health, water supply and education, could get 30% of total project cost from the center,” she said, adding that States could chip in with another 30% and the rest can be private sector investments. These projects should entail full recovery of operating costs to qualify for the VGF.

Separately, pilot projects in health and education, with at least 50% operational cost recovery, can get as much as 40% of the total project cost from the central government. The center and states would together bear 80% of the capital cost of the project and 50% of operation and maintenance costs of such projects for the first five years.

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