Rs5000 crore Gujarat Infra Fund to be launched

The Gujarat government will soon enter the open market to create a Rs5000 crore Gujarat Infrastructure Fund to finance its various projects. This includes the upcoming projects in information technology, biotechnology, small and medium enterprise and nano technology projects among others.

The state government has decided to create a Rs5000 crore professionally run infrastructure fund similar to the funds run by private and nationalised banking institutions. The government has allocated a fund of Rs5 crore as seed money in the current budget for the same.

The fund will be managed by the Gujarat Venture Finance Ltd, an agency established under Gujarat Industrial Investment Corporation(GIIC) and initiated by the World Bank.  Highly placed sources in the state government said that, "GIIC has proposed to create Gujarat Venture Finance Limited with a fund of Rs5000 crore in three years time for investment in various sectors of the economy."

The source, however, said the main focus area of investments will be alternate energy and clean technology and growth centres in service and manufacturing sectors. The fund will be operational by April, 2010.

"The investment plans will have a pan India focus with major focus in Gujarat and fund allocation will be kept open, depending on the opportunities and will not be restricted to any sector," said the source. The source said return on investment is expected to be about 18% to 21% of the investment. 

"As per plans it would be invested in the public private partnership (PPP) model wherein 20-25% contribution of the total fund plan would be from the government," said the source. GC Murmu, MD of GIIC told that the fund aims to finance alternate and clean energy projects and fast developing sectors like IT.

"Rs5000 crore fund will be generated from the market through various banking institutions. GVLF will mange this fund. GIIC as a key equity holder will provide initial finance,” said Murmu.