www.pppinindia.gov.inPPP TOOLKIT
PPP TOOLKIT for Improving PPP
Decision-Making Processes

Sector: State Highway  |  Module 1: PPP Background

PPP supporting environment

Public sector funding assistance for PPPs

Viability Gap Funding (VGF) is designed to provide capital support to PPP projects which would not otherwise be financially viable. VGF has the effect of reducing the revenue required to recover costs and provide a financially attractive return for the private sector.

A Viability Gap Fund has been established at the Centre and some States have also established State-level VGF schemes (eg. Gujarat). Further information on the Central VGF scheme is available here

Other grant schemes may also be available to finance PPPs. These include the Jawaharlal Nehru National Urban Renewal Mission (JnNRUM) which supports infrastructure projects in large cities under its Sub-Mission I. Support under the Mission is available for road networks, as well as water and sanitation, solid waste management and BRTS and other urban transport projects. JnNURM is administered by the Ministry for Urban Development.

Further information on the Mission is available here.

The Government of India has established the Indian Infrastructure Finance Company Limited (IIFCL) to provide support for infrastructure funding. This takes advantage of the Government’s sovereign borrowing capacity to create a large fund that can then on-lend to PPP projects.


  Next Page: Private sector appetite and capacity