The finance ministry is readying a special fund of Rs 50,000 crore to address funding challenges of power sector projects soon after the Budget announcement, in order to provide continuous electricity across the country.
?The proposal is under discussion and the size of the corpus will be decided soon,? said financial services secretary GS Sandhu on Saturday.
As part of efforts to improve funding of infrastructure sector projects, the finance ministry is also working on setting up two asset reconstruction companies for the power and roads sector.
?We are working on a model to address the stressed assets concerning the power and road sectors and hope to find a solution in these major areas,? Sandhu said at an event organised by Ficci.
According to the proposal, the ARCs will take over the projects that are pending in roads and power sector to revive them so that they can successfully take off and loans from the banking sector do not turn into non-performing assets.
?The government has expressed its determination to bring down the Non-Performing Assets (NPAs) of banks, particularly those relating to the power and road sectors, both of which have agreed to the setting up of dedicated Asset Reconstruction Companies (ARCs),? he said.
Special ARCs will be set up for these two sectors as they require dedicated focus, Sandhu said, adding that the proposals will be finalised soon.
While the ARC for the power sector will include some public sector banks and power sector PSUs such as Power Finance Corporation and Rural Electrification Corporation, the road sector ARC will include the National Highways Authority of India.
?Long term financing for infrastructure has been a major constraint in encouraging larger private sector participation in this sector,? finance minister Arun Jaitley had said as part of his Budget speech on July 10. The plan is expected to help both the banking sector, which is facing a record high of NPAs as well as infrastructure projects that find it difficult to get long term financing. Power projects in particular have a long gestation period.
