What is Viability Gap Funding (VGF)?
Q. Which of the following statements is/are correct about Viability Gap Funding (VGF)?
1. Viability Gap Funding (VGF) is a grant one-time or deferred, provided to support infrastructure projects that are economically justified but fall short of financial viability.
2. It will be a Plan Scheme to be administered by the Ministry of Finance with suitable budgetary provisions to be made in the Annual Plans on a year-to- year basis.- Published on 08 Sep 15a. Only 1
b. Only 2
c. Both
d. None
ANSWER: Both
VGF is typically provided in competitively bid projects. Under VGF, the central government meets up to 20% of capital cost of a project being implemented in public private partnership (PPP) mode by a central ministry, state government, statutory entity or a local body. The state government, sponsoring ministry or the project authority can pitch in with another 20% of the project cost to make the projects even more attractive for the investors. Potential investors bid for these projects on the basis of VGF needed. Those needing the least VGF sup-port will be awarded the project. The scheme is administered by the ministry of finance.
