Budget may pitch ₹25,000 cr risk guarantee fund for infra

The Centre is working on a ₹25,000-crore safety net for infrastructure projects to ease financing bottlenecks and revive stalled projects, two people familiar with the plans said.

- Subhash Narayan

The fund, proposed on the lines of credit guarantee schemes for small businesses, may be announced in the Union budget for fiscal year 2027 (FY27).

The proposal was submitted to the finance ministry by a committee formed under the National Bank for Financing Infrastructure and Development (NaBFID), the people cited above said on the condition of anonymity. The National Credit Guarantee Trustee Co. (NCGTC) is likely to underwrite development risks for infrastructure projects, allowing banks and financial institutions to lend on easier terms.

The move comes amid rising project delays, cost overruns, and higher borrowing costs that have long con-strained investment flows into India's infrastructure sector. Government estimates suggest India needs roughly $2.2 trillion in infrastructure investmentby2030tosustain its$7 trillion growth ambition.

"The risk guarantee fund would cover a portion of loans extended by banks and financial institutions to infrastructure projects for a nominal fee. This would reduce financing risk, enable higher credit flow and allow lenders to take larger exposures. While the guarantee cost would be added to borrowing costs, the impact on lending rates is expected to be minimal," said one of the government officials cited above, requesting anonymity.