Viability Gap Fund
- VGF is a government’s initiative to assist private investors or entities to set up projects of high economic worth
- Private investors are not interested in building infrastructure as financial return is less so government extends its support to the investors by sharing a fraction of the cost, making the project viable.
- Typically, VGF is provided in competitively bid projects. The central
government meets up to 20% of capital cost of a project being
implemented in Public Private Partnership (PPP) mode by a central
ministry, state government, statutory entity or a local body. The state
government, sponsoring ministry or the project authority can provide
another 20% to attract .
- Those needing the least VGF assistance will be awarded the project. The Ministry of Finance administers the scheme.
- Projects in a number of sectors such as roads, ports, airports,
railways, inland waterways, urban transport, power, water supply, other
physical infrastructure in urban areas, infrastructure projects in
special eco-nomic zones, tourism infrastructure projects are generally
eligible for VGF.
- The Viability Gap Funding Scheme provides financial support in the form of grants, one time or deferred, to infrastructure projects undertaken through public private partnerships with a view to make them commercially viable. GoI has established a Viability Gap Fund to aid the PPP infrastructure projects which face the viability gap due to inherent nature of the project.
