Infrastructure- 1 | Economy for UPSC 2024 (Pre & Mains) PDF Download

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INFRASTRUCTURE
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INFRASTRUCTURE
VARIOUS INVESTMENT MODELS/TERMS
Greenfield Investment
An investment by a firm in a new manufacturing plant, workshop, etc. 
Greenfield Projects lack constraints imposed by prior work. E.g. new 
factories/ industries which are build from scratch
Brownfield Investment
Investment into a pre-existing project, industry or manufacturing 
plant. E.g. capacity expansion of a car manufacturing plant.
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INFRASTRUCTURE
VARIOUS INVESTMENT MODELS/TERMS
Greenfield Investment
An investment by a firm in a new manufacturing plant, workshop, etc. 
Greenfield Projects lack constraints imposed by prior work. E.g. new 
factories/ industries which are build from scratch
Brownfield Investment
Investment into a pre-existing project, industry or manufacturing 
plant. E.g. capacity expansion of a car manufacturing plant.
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. 
Lack of financial viability usually arises from long gestation periods 
and/or inability to increase user charges to commercial levels. 
Infrastructure projects also involve externalities that are not adequately 
captured in direct financial returns. 
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INFRASTRUCTURE
VARIOUS INVESTMENT MODELS/TERMS
Greenfield Investment
An investment by a firm in a new manufacturing plant, workshop, etc. 
Greenfield Projects lack constraints imposed by prior work. E.g. new 
factories/ industries which are build from scratch
Brownfield Investment
Investment into a pre-existing project, industry or manufacturing 
plant. E.g. capacity expansion of a car manufacturing plant.
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. 
Lack of financial viability usually arises from long gestation periods 
and/or inability to increase user charges to commercial levels. 
Infrastructure projects also involve externalities that are not adequately 
captured in direct financial returns. 
VIABILITY GAP FUNDING
Government of India has notified a scheme for Viability Gap Funding to infrastructure projects 
that are to be undertaken through Public Private Partnerships. 
The quantum of VGF provided under this scheme is in the form of a capital grant at the stage of 
project construction. 
Amount of VGF will be subject to a maximum of 20% of total project cost. 
Support under this scheme is available only for infrastructure projects where private sector 
sponsors are selected through a process of competitive bidding. 
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INFRASTRUCTURE
VARIOUS INVESTMENT MODELS/TERMS
Greenfield Investment
An investment by a firm in a new manufacturing plant, workshop, etc. 
Greenfield Projects lack constraints imposed by prior work. E.g. new 
factories/ industries which are build from scratch
Brownfield Investment
Investment into a pre-existing project, industry or manufacturing 
plant. E.g. capacity expansion of a car manufacturing plant.
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. 
Lack of financial viability usually arises from long gestation periods 
and/or inability to increase user charges to commercial levels. 
Infrastructure projects also involve externalities that are not adequately 
captured in direct financial returns. 
VIABILITY GAP FUNDING
Government of India has notified a scheme for Viability Gap Funding to infrastructure projects 
that are to be undertaken through Public Private Partnerships. 
The quantum of VGF provided under this scheme is in the form of a capital grant at the stage of 
project construction. 
Amount of VGF will be subject to a maximum of 20% of total project cost. 
Support under this scheme is available only for infrastructure projects where private sector 
sponsors are selected through a process of competitive bidding. 
EPC
ENGINEERING PROCUREMENT 
CONSTRUCTION MODEL 
EPC is a model of contract between government & private players for public infrastructure 
building. 
Under this system entire project is funded by government.
Under EPC, the contractor builds the project by designing, installing & procuring necessary 
labour & land to construct the infrastructure, either directly or by subcontracting.
Under this model contractor is legally responsible to complete the project under some fixed 
predetermined time-line & may also involve scope for penalty in case of time overrun.
In EPC as all the clearances, land acquisition and regulatory norms have to be completed by the 
government itself, private players do not have to get itself involved in these time taking 
procedures.