Development Finance institution (DFI)

Why in news?

• Government is moving towards setting up of a new Development Finance institution (DFI) to fill the gap in long-term finance for infrastructure sectors.

About DFIs:

• A DFI is an institution that provides long-term finance for social and economic infrastructure where risks may be higher than what the ordinary financial system may be willing to bear.
• DFIs may or may not be state lead.
• Development finance institutions previously created include ICICI, IDBI, NABARD and IRBI.
• The proposed DFI will be used to finance both social and economic infrastructure projects identified under the National Infrastructure Pipeline (NIP).

About the Pipeline:

• National Infrastructure Pipeline is intended to accelerate construction of selected greenfield and brownfield infrastructure projects.
• Each project would cost Rs.100 crore or more.
• The funding of the Pipeline will be jointly made by the Centre, states and the private sector in the proportion of 39:39:22.
• A Task Force was set up to identify technically feasible and financially viable infrastructure projects that can be initiated between FY2021-25.
• Accordingly, the high-level task force under Economic Affairs Secretary had drawn up projects totalling investments of Rs 111 lakh crore across roads, railways, energy and urban sectors.
• It will also guide ministries in identifying appropriate sources of financing and suggest measures to monitor the projects to minimise cost and time overruns.

PRELIMS QUESTION

Consider the following statements regarding National Infrastructure Pipeline:
1.National Infrastructure Pipeline would include both greenfield and brownfield projects.
2.It would be funded entirely by the central government.
Which of the statements given above is/are correct?
(a)1 only
(b)2 only
(c)Both 1 and 2 
(d)Neither 1 nor 2

Answer to prelims question