The apathy of state governments toward infrastructure development, on Saturday, prompted the Centre to announce a Rs 100 crore corpus to help them in preparatory work of projects coming up with public-private participation.

“It would be a revolving fund that will get replenished from successfully bid projects. In case it needs to be topped up, it would be topped up through budgetary support,” Finance Minister P Chidambaram said at a conference of Chief Secretaries on Public-Private Partnership (PPP).

The fund, to be called India Infrastructure Project Development Fund, would bear up to 75 per cent of development costs of projects till the bidding stage, he said.

If the bidding is successful, the amount given to states would be treated as interest free loans and in case the exercise fails, the assistance would be converted into grant. In case of successful bidding, the money would be recovered from those who get the contract, he said.

Finance Ministry sources said the fund would be sent to the Cabinet Committee of Economic Affairs after approval by the Finance Minister, who had proposed it in the Budget for 2007-08. Although finances were available, there were not enough infrastructure projects on the shelf in states, Chidambaram said, noting that large private funds were looking at India with interest.

Forex reserve
After launch of two funds for infrastructure projects, including the $5 billion fund by Citigroup, Blackstone, IDFC and IFCL combine, other similar initiatives are waiting to be launched in India, he said.

The Finance Minister reiterated that talks with the Reserve Bank were on to provide US$ 5 billion from forex reserves for infrastructure projects.

“We have succeeded in convincing the RBI to lend US$ 5 billion from the forex reserves to the India Infrastructure Finance Company Ltd, which would finance the infrastructure projects of Indian companies, especially for capital imports,” a finance ministry official said.