No takers for Rs 10,000 crore stimulus

Till date though,IIFCL could not find any takers for funds because of a condition that the money should be disbursed as loans to projects bid only after January 31,2009. The finance ministry is yet to take a decision on relaxing this condition. There was a proposal to advance the timeline by three months to September end. According to government officials,projects bid out in October 2008 are now shaping up and qualifying for loans. The projects have been awarded and detailed project reports (DPRs) have been worked out. But with no easing of the timeline,these projects do not qualify for disbursals from IIFCL’s Rs 10,000-crore kitty.

“We will be able to start lending from the Rs 10,000 crore only by the first quarter next year. The reason is that there are fewer projects on the table currently and the bidding procedure itself takes upto six months,” chairman IIFCL SS Kohli told The Indian Express. IIFCL has also been allowed to raise an additional Rs 30,000 crore to fund infrastructure projects through re-financing. This was announced in the second fiscal stimulus package announced by the UPA government in January 2009 and intended as a counter cyclical measure to the downturn.

“As far as Rs 30,000 crore fund raising is concerned,that will come up only when the first tranche of Rs 10,000 crore has been disbursed,” Kohli said.

The first tranche of funds was raised through tax-free bonds at 6.85 per cent and a minimum subscription amount of Rs 10 lakh per individual. IIFCL raised the funds through subscriptions from high-net-worth-individuals,pension funds,banks and institutional investors.

The number of projects bid out in the first seven months of this calendar year have been low on account of litigation,confusions in bidding documents and also some liquidity pressures. The election code of conduct too had delayed award of projects since special clearances had to be sought.