Govt May Adopt New Funding Models for Disasters & Infrastructure

27 Jan 2025 , 10:30 AM

According to a State Bank of India research, the Union government may unveil creative initiatives to support infrastructure, agriculture, MSMEs, and other vital sectors in its upcoming Budget 2025.

Alternative funding sources, focused production-linked incentive (PLI) programs, and tactics to improve India’s green economy and disaster management are a few examples of these actions.

It stated that the “Government may introduce alternate sources of funding to infrastructure projects, which are generally cheaper than loan markets for better rated borrowers like Tax Free Bonds, Tax Paid Bonds, etc.” This strategy might increase infrastructure development and reduce finance costs.

The research recommended the establishment of an omnibus Credit Guarantee Fund Trust for Agri & Allied Sectors (CGFTAAS) in the agricultural sector. By guaranteeing coverage for new agricultural loans, such as Agri Value Chain Financing (AVCF), this would serve as a credit accelerator.

To increase the sector’s efficiency, it also suggested putting the 2021 report on the agricultural value chain into practice.

The definition of Priority Sector Lending (PSL) may vary for the housing industry. A change from the 2018 criteria, projects costing Rs 65 lakh in six metro areas and Rs 50 lakh in other areas may now be considered affordable housing under PSL.

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