IMF: Infrastructure SPV is a positive step

New Delhi: The IMF has praised the Indian government for its initiative towards funding infrastructure. It said the proposed Rs10,000 crore special purpose vehicle (SPV) will not impact fiscal deficit.

IMF managing director Rodrigo de Rato said that the SPV was a positive step forward, and within the limits of the budgetary provisions of the government. Setting up a SPV for infrastructure funding was a "good proposal" as it would not only fund public sector but also commercially viable private sector projects.

Finance Minister P Chidambaram in his budget provided a counter-guarantee to the proposed SPV for raising Rs10,000 crore from the market through long term bonds.

The Planning Commission has welcomed the move, but feels it may have an indirect effect on fiscal deficit.

The plan panel had earlier suggested that a small portion of the burgeoning forex reserves, now at over $137 billion, could be utilised for infrastructure development.