The Centre is working on a partial credit guarantee scheme to de-risk infrastructure financing, with plans to cover projects worth up to Rs 5 trillion over the next few years. The proposed mechanism would offer a limited guarantee – likely in the range of 5–10 per cent of project costs – to improve lender confidence and ensure smoother funding flows during vulnerable execution phases.
At the core of the plan is the proposed Infrastructure Risk Guarantee Fund, which will support projects facing cost overruns or temporary liquidity stress during construction and the initial stabilisation period after completion. The guarantee cover is expected to be available for a short tenure of around 2–3 years, targeting precisely the phase where risks are highest, and revenues are yet to materialise.
The government is considering an initial corpus of about Rs 100-150 billion to operationalise the scheme. Preliminary consultations have already been held with banks and project developers to fine-tune the structure and ensure it addresses real financing bottlenecks.
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