A special fund may be announced in the upcoming Union Budget 2025 to compensate for the losses incurred due to delay in infrastructure projects. This step will be taken with the aim of protecting investors from financial losses due to delays associated with such projects.
According to Lakshman Roy, Economic Policy Editor of CNBC-Awaaz, the main objective of this fund is to provide risk cover to investors and promote investment in the infrastructure sector.
Functioning and Objectives of the Fund
According to sources, this fund will compensate the losses suffered by investors and developers due to delays in infra projects.
- Risk Cover: Risk cover will be provided to developers through this fund.
- Investment protection: Both domestic and foreign investors will benefit from this.
- Focus on Greenfield Projects: This fund will be exclusively for Greenfield Projects (new and early stage projects).
- Delay Compensation: Losses incurred by investors due to delays in government approvals and land acquisition will be covered.
Why was this needed?
- Infrastructure delays:
Infrastructure projects are often delayed in government approvals, land acquisition and legal processes. This not only increases the cost of projects, but investors also have to suffer huge financial losses. - Increasing investor confidence:
The objective of this fund is to increase investor confidence in the infrastructure sector. It is important to assure foreign and domestic investors that their investments are safe. - Promotion of greenfield projects:
Early stage projects (greenfield) have higher risk. This fund will provide assistance to such projects.
Benefits for investors
- Compensation for economic loss: If the project is delayed, investors will be protected from economic loss.
- Risk Reduction: This fund will provide investors with assurance that the risk of their investment can be reduced.
- Faster work: The fund will provide additional incentive to complete projects on time.
