Letters to the editor dated February 10, 2021

| Updated on February 11, 2021

Funding DFIs

Apropos ‘Return of DFIs’ (February 10), just as a patient with a specific ailment is best treated by a specialist, project financing too is better handled by professional lenders. Besides lacking expertise in the field, commercial banks are also hampered by source of funding, given that infrastructure lending is for the long haul, not to speak of the moratoriums extended, causing the banks acute asset-liability mismatches.

DFIs, with capitalisation assured by the government, would have no difficulty sourcing funds, with banks and even individuals readily subscribing to their bonds, provided the same are made attractive, by way of eligibility to meet SLR requirements for the former and a decent return for the latter. However, what is of paramount importance is that the proposed institutions are manned by those with expertise in project financing, with adequate checks and balances in place, so that only viable projects are funded and eventually take off, resulting in recycling of the funds. As with any scheme, the proof of the pudding will be in its eating!

V Jayaraman


Project financing

While establishing a DFI, the focus must be on diversified sources of funding. While the Centre must adequately capitalise the DFI to give it the status of a sovereign-backed entity, alternative routes such as capital gains bonds, external borrowings and loans from multilateral agencies must also to be explored so that over-dependence on the fisc is avoided.

Hitherto, project finance institutions tend to be tripped by factors outside their control and lack of experience. So, right from the beginning, steps need to be taken to ensure that the financing is done with proper assessment of the project to avoid any non-performing asset in future. The success of a DFI is contingent on ironing out such issues.


Bhimavaram, AP

AIF route

Infrastructure needs funding support over an extended period to break-even. Apart from issuance of capital gains or tax-free bonds to prospective investors, a viable solution could be establishment of an alternative investment fund (AIF). This would attract investments from potential domestic and foreign investors.

Sitaram Popuri


Economic imponderables

Undermining the gravity of financial matters can aggravate socio-economic problems. Transparency on politico-social issues is crucial to overcome the trust deficit. Are the job numbers, especially since the pandemic, being periodically reviewed? Why is the government keen to project a V-shaped, rather than a K-shaped, recovery?

How will the economy manage to regain pre-pandemic levels of growth, despite two quarters of significant de-growth, a wider fiscal deficit, high unemployment and poor direct tax collections? Should atmanirbharta culminate in insolvency for the lenders, the shareholders or the working middle class? In order to be vocal for the right set of products and services, it is important that the norms laid down are unambiguous and can be easily adhered to. Also, would privatisation of loss-making PSUs, increased protectionism, and sizeable toy exports boost GDP?

Girish Lalwani


Congress on the sidelines

This refers to ‘Congress strains to ride on farm movement’ (February 10). One can see the real intention behind Congress MPs from Punjab moving a private members’ Bill to repeal the three farm laws. Unlike some of the regional parties, the Congress has not been able to make inroads into the farmers’ movement. So, it’s not surprising that the party General Secretary, Priyanka Gandhi, attended a mahapanchayat called by the local khaps in Chilkhana village, Saharanpur.

The grand old party was not included in the all-party delegation of MPs which went to Singhu on Delhi’s border last week to express solidarity with the farmers. Such is the height of the Congress party’s desperation that it took no time in fully supporting the ‘pro-farmer’ tweets of foreign celebrities.

SK Gupta

New Delhi


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Published on February 10, 2021
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