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How Value Capture Funding can help Infrastructure Project Financing in India?

Set up by the Government in 2006, it provides long-term financial and advisory support to infrastructure projects across the spectrum in India (upto 30 years) through senior-debt, sub-debt, credit enhanced bonds, take-out finance etc. All projects are wholly government owned. Its advisory services include projects like financial closures, highways, waste to energy, solar and wind, and setting up JVs between state govt and railways. One important provision is Value Capture Funding wherein, expansion of infrastructure into underdeveloped or ignored parts of a city leads to increase in value of the land which can be encahsed through enhanced property tax, enhanced land value tax and incremental tax and the additional cash flow can be used for the same project or for other projects. This also leads to more reassurance to lenders about cashflows. To enable Value capture funding, there needs to be coordination among all stakeholders involved to address the multiplicity of control.

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