India approves $11B Electricity Fund

India's Union finance ministry has approved the creation of a US$11.053 billion National Electricity Fund to attract investments in the distribution sector.

The ministry has also agreed to provide an interest subsidy for lending under the fund.

With this go-ahead, the power ministry is set to seek Cabinet approval for the scheme, after inviting comments from different departments.

“The in-principle approval by the finance ministry for NEF, including the interest subsidy mechanism under it, has been received. We will circulate a Cabinet note next week, seeking comments from all the ministries concerned,” said power secretary P Uma Shankar.

He said the scheme could start with a smaller amount. “The size of the fund will be fixed at the level of the Cabinet. However, size is not so important. The scheme will attract investment in the distribution sector, which has not been taking place as desired,” he said.