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THEME PAPER

Rs.130 crore from its own landowners, 20-30% was used to financing mechanism to cover
resources and borrowed Rs. 100 develop amenities like gardens, the ever growing investment
crore from a consortium of six roads, schools, and the requirements. Different state and
nationalized banks. For the remaining land was sold as central governments have tried
second phase, the PPP method individual plots. Because of the and tested various value capture
of project financing was infrastructure development, the methods, municipal bonds, PPP
implemented using the BOT value of the land increased and methods and various other
model. Under the contract, the AUDA earned close to Rs.600 instruments. There is a need to
private party was responsible for crore through the sale of plots. substantially boost up the
designing, engineering, The entire project was investments in the infrastructure
financing and constructing the implemented in phases and was sector. Value Increment
road in 18 months, the entity repeatedly delayed because of Financing is a successful method
was supposed to raise the cost of financing issues. Different that has been used around the
funding phase 2 along with stakeholders had to be involved globe for the successful
recovering the cost invested by in phases to fund the project. In completion of infrastructure
AUDA from its resources for the initial phase, AUDA had to projects. The method does not
phase 1. The entity was also borrow and put in a lot of require to alter/ modify/
responsible for managing the money from its own resources. discontinue any existing practice
operation and maintenance of The project could have been of financing. VIF can be used
the project. The entity raised the executed in a single phase along with any of the already
resources using toll tax and without involving so many existing instruments to catalyse
advertisement rights. The third agencies if the VIF mechanism more investments. The BKC
phase of the project was funded was adopted. AUDA could have project and the Sardar Patel Ring
by the JNNURM programme of borrowed the funds required Road project are examples of
the central government. The from an external agency for a successful value capture
entire project cost Rs.2347 crore longer term. A small grant from instruments used for the
which included Rs. 230 crore for a state/central agency could have redevelopment of the areas
payment to AUDA, Rs.192 crore acted as the seed money. Using along with infrastructure
for phase 2, Rs.294 crore for the toll taxes, advertisement development. The developing
maintenance, Rs.131 crore for charges along with the taxes on authorities could be in a be er
collection of toll and the “incremental values” due to and comfortable position with
management during the entire the infrastructure development, the use of the VIF mechanism
duration and Rs.1,500 crore repayment could have been along with their value capture
accounted for interest on streamlined. AUDA could have methods.
instalments of capital and kept the land, which it sold, for The Union Budget 2021-22
maintenance cost. further development in the highlights the importance of
The total revenue was estimated future or could have given it on raising resources using the assets
at Rs.2350 crore to be recovered lease to private entities. lying idle with different
over a period of 20 years starting CONCLUSION government agencies. Asset
at Rs.12 crore per year in 2006 to The increase in the urbanisation monetization will prove to be
Rs.220 crore per year in 2026. rate and the increasing demands very helpful to raise long-term
Out of the total land acquired, of infrastructure and civic debt for infrastructure financing.
60% was returned to the original amenities calls for a well-defined Also, with a large amount of

April 2021 Volume 22 No. 1- SHELTER 27