Cabinet approves continued PPP with VGF for infra projects

11 Nov 2020 Editorial Team

The revamped scheme is mainly related to introduction of following two sub-schemes for mainstreaming private participation in social infrastructure: Sub scheme -1 (infrastructure and other): This would cater to social sectors such as waste water treatment, water supply, solid waste management, health and education. Projects in these industries face bankability issues and poor revenue streams to cater fully to capital costs. The projects eligible under this category should have at least 100% operational cost recovery. The central government will provide maximum of 30% of the total project cost (TPC) of the project as VGF and state government or sponsoring central ministry or statutory entity may provide additional support up to 30% of TPC.

Sub scheme -2 (health and education): This sub-scheme will support demonstration/pilot social sectors projects. The projects may be from health and education sectors where there is at least 50% Operational Cost recovery. In such projects, the Central Government and the State Governments together will provide up to 80% of capital expenditure and up to 50% of operation and maintenance (O&M) costs for the first five years. The Central Government will provide a maximum of 40% of the TPC of the project. In addition, it may provide a maximum of 25% of operational costs of the project in first five years of commercial operations.

Background: The Department of Economic Affairs at the Ministry of Finance had introduced "the Scheme for Financial Support to PPPs in Infrastructure (Viability Gap Funding Scheme)” in 2006 with a view to support infrastructure projects undertaken through PPP mode that are economically justified but commercially unviable due to large capital investment requirements, long gestation periods and the inability to increase user charges to commercial levels, hi this existing Scheme, VGF up to 40% of TPC is provided by the Government of India and the sponsoring authority in the form of capital grant at the stage of project construction (20% + 20%).

Since the inception of the scheme, 64 projects have been accorded 'final approval' with total project cost of Rs 34,228 crore and VGF of Rs 5,639 crore. Till the end of FY2019-20, VGF of Rs 4,375 crore has been disbursed.

Implementation: The new scheme will come into force within one month of the approval of the cabinet. Proposed amendments under the revamped VGF scheme would be suitably incorporated in the guidelines for the scheme.

Source: Government of India PIB

The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi has approved continuation and revamping of the scheme for financial support to public-private partnerships (PPPs) in infrastructure viability gap funding (VGF) scheme until 2024-25 with a total outlay of Rs. 8,100 crore. The revamped scheme is mainly related to introduction of following two sub-schemes for mainstreaming private participation in social infrastructure: Sub scheme -1 (infrastructure and other): This would cater to social sectors such as waste water treatment, water supply, solid waste management, health and education. Projects in these industries face bankability issues and poor revenue streams to cater fully to capital costs. The projects eligible under this category should have at least 100% operational cost recovery. The central government will provide maximum of 30% of the total project cost (TPC) of the project as VGF and state government or sponsoring central ministry or statutory entity may provide additional support up to 30% of TPC. Sub scheme -2 (health and education): This sub-scheme will support demonstration/pilot social sectors projects. The projects may be from health and education sectors where there is at least 50% Operational Cost recovery. In such projects, the Central Government and the State Governments together will provide up to 80% of capital expenditure and up to 50% of operation and maintenance (O&M) costs for the first five years. The Central Government will provide a maximum of 40% of the TPC of the project. In addition, it may provide a maximum of 25% of operational costs of the project in first five years of commercial operations. Background: The Department of Economic Affairs at the Ministry of Finance had introduced the Scheme for Financial Support to PPPs in Infrastructure (Viability Gap Funding Scheme)” in 2006 with a view to support infrastructure projects undertaken through PPP mode that are economically justified but commercially unviable due to large capital investment requirements, long gestation periods and the inability to increase user charges to commercial levels, hi this existing Scheme, VGF up to 40% of TPC is provided by the Government of India and the sponsoring authority in the form of capital grant at the stage of project construction (20% + 20%). Since the inception of the scheme, 64 projects have been accorded 'final approval' with total project cost of Rs 34,228 crore and VGF of Rs 5,639 crore. Till the end of FY2019-20, VGF of Rs 4,375 crore has been disbursed. Implementation: The new scheme will come into force within one month of the approval of the cabinet. Proposed amendments under the revamped VGF scheme would be suitably incorporated in the guidelines for the scheme. Source: Government of India PIB

Infrastructure Transport

06 Feb 2026

Lucknow Metro East-West Corridor Consultancy Contract Awarded

The Uttar Pradesh Metro Rail Corporation has awarded the first construction-related consultancy contract for the Lucknow Metro East West Corridor to a joint venture of AYESA Ingenieria Arquitectura SAU and AYESA India Pvt Ltd. The firm was declared the lowest bidder for the Detailed Design Consultant contract for Lucknow Metro Line-2 under Phase 1B and the contract was recommended following the financial bid. The contract is valued at Rs 159.0 million (mn), covering design services for the corridor. Lucknow Metro Line-2 envisages the construction of an 11.165 kilometre corridor connecting Cha..

Infrastructure Urban

06 Feb 2026

Div Com Kashmir Urges Fast Tracking Of Jhelum Water Transport Project

The Divisional Commissioner of Kashmir has called for the fast-tracking of the Jhelum water transport project, urging district administrations and relevant agencies to accelerate planning and clearances. In a meeting convened at the divisional headquarters, the commissioner instructed officials from irrigation, public health engineering and municipal departments to prioritise the project and coordinate survey and design work. The directive emphasised removal of administrative bottlenecks and close monitoring to ensure timely mobilisation of resources and contractors. Officials were told to in..

Infrastructure Urban

06 Feb 2026

Interarch Reports Strong Q3 And Nine Month Results

Interarch Building Solutions Limited reported unaudited results for the third quarter and nine months ended 31 December 2025, recording strong revenue growth driven by execution and a robust order book. Net revenue for the third quarter rose by 43.7 per cent to Rs 5.225 billion (bn), compared with Rs 3.636 bn a year earlier, reflecting heightened demand in pre-engineered building projects. The company’s total order book as at 31 January 2026 stood at Rs 16.85 bn, supporting near-term visibility. EBITDA excluding other income for the quarter increased by 43.2 per cent to Rs 503 million (mn),..