Debt funds have been a popular way of accumulating money for undertaking development work all over the world. India, though late in the race, has also decided to launch debt funds of about $7 to $11 billion. The funds raised from this move will be used to fund highways and other infrastructure. Over the next five years India is planning to spend about $500 Billion to update the infrastructure that is believed to be slowing the country’s growth.
Rather than accumulating a single lump sum fund, there will be several series of financial ventures which will be launched over a period of several years. The funds will be more in number and smaller in size. By the end of this year itself, the first debt fund for $11 Billion, will be set up. This money will be specifically targeted towards improving infrastructure.
In addition to these debt funds, by the end of 2012, there are also plans to launch several policy changes which will encourage higher participation of both foreign and private equity funds in infrastructure projects. Right now, even though the government allows 100% FDI in the road sector. However, private investors find difficulties in acquiring land. Apart from that, there are other difficulties which deter the investors from investing money in Indian infrastructure.
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