The fate of the special purpose vehicle on infrastructure hangs in balance due to serious differences between the finance ministry and the Planning Commission on its proposed structure.
The main points of contention between the two bodies are the appointment of official directors on the board of the SPV, the kind of companies it should lend to and whether refinancing should be allowed.
The contours of the SPV structure are to be discussed at a meeting of the prime minister's committee on infrastructure slated for next week. The ministry will then finalise a note on the issue and send it to the Cabinet.
The Planning Commission is in favour of official directors being appointed on the board of the SPV. The finance ministry, however, wants that board members be appointed only on the basis of their professional competence. While the Planning Commission is against allowing the SPV to refinance existing projects, the finance ministry wants this to be allowed.
The Plan body has argued that refinancing will mean reinvesting in existing projects and will not add to the shelf of infrastructure projects in the economy.
Also, the Planning Commission wants the SPV to fund only public-private partnerships, the finance ministry's view is that money should be provided to private sector companies also.
Finally, while the Planning Commission wants all borrowings to be guaranteed by the Union government, the finance ministry is not inclined to make this provision mandatory.
The SPV will have an initial paid-up capital of Rs 10 crore (Rs 100 million). The authorised capital, however, has been fixed at Rs 1,000 crore (Rs 10 billion). The borrowing limit for the current fiscal has been pegged at Rs 10,000 crore (Rs 100 billion).
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