Pooled Finance Development Fund Scheme

Pooled Finance Development Fund Scheme

To make the economy grow at its full potential, the Government of India continuously strives to frame appropriate economic policies. All economies depend on three sectors – The primary sector, the Secondary sector and the Tertiary sector. To keep these sectors contributing optimally, the government has various policies, plans, schemes and funds.

The schemes and funds introduced by the government are the driving force to eliminate the technological gaps, poverty line and lack of employment. One such scheme by the Government of India is the Pooled Finance Development Fund Scheme (PFDF). This scheme focuses on creating urban infrastructure as an asset for the Indian economy.

The Pooled Finance Development Fund stresses the need to create a bankable urban infrastructure through actionable plans and financial strategy. The government plans to invest in enhancing Urban Local Bodies (ULBs) with bankable projects. It provides accessibility to varied forms of financial help for the small and medium ULBs. 

Pooled Finance Development Fund Scheme

The Pooled Finance Development Fund Scheme is an initiative of the Government of India. The scheme was first launched in 2006. The Ministry of Urban Development is the nodal ministry that manages and improvises the scheme. The scheme aims to provide credit facilities to all the urban local bodies. These credits are supposed to be used to enhance the infrastructure development of urban India.

The Pooled Finance Development Fund has been introduced to assist the small ULBs in getting credit from alternative sources. These credits, however, are only meant to be used for investing in projects related to infrastructure. The projects that come under it include school facilities, hospitals, pharmacies, hypermarkets, roads, bridges and other infrastructure projects.

The credits are given to a particular urban local body based on its creditworthiness. This would enable that particular body to get funds from pooled funds of the state. Here, pooled funds refer to collective funds, either by the state or a group of investors. The Pooled Finance Development Fund intends to provide self-sustaining opportunities to the ULBs in India.

Pooled Finance Development Fund Scheme-Objectives

When the government implemented the Pooled Finance Development Fund Scheme, specific objectives were set to achieve. These objectives are:

• To provide the local urban bodies facilities to access the capital market. This scheme aims to provide finance to the urban bodies and invest the funds in the right place to yield back profits. 
• The credit facilities are aimed to be provided by the State Pooled Finance Entities (SPFE). Therefore, the SPFE would also be provided with the opportunity to be in the mainstream of the capital market after it has invested in the projects. 
• To initiate various infrastructural projects to enhance lifestyles of urban India. 
• To provide a reliable source for the local bodies to take credit from.  
• To provide ULBs with debt that is comparatively less costly than the other types of debt instruments available. 
• The Pooled Finance Development Fund acts as a nodal agency. It is the connection between the Central and State to facilitate the suitable urban projects.

Eligibility for Pooled Finance Development Fund Scheme (PFDF)

• The local urban body that expects to avail of the scheme must have its state established with a State Pooled Finance Entities (SPFE). 
• The SPFE must belong only to the state. It can be a trust operated by the state or a Special State Entity for a specific purpose. 
• The funds for the scheme are to be withheld by the state and only used under the guidelines provided by the Central government. 
• The borrowing entity must have all of its documentation and must be registered. In addition to that, the borrowing entity must prove its creditworthiness to acquire the credit.

Pooled Finance Development Fund Scheme – Expected Outcomes

• To establish the urban local bodies as self-reliant. The scheme gives a push to the local urban bodies to take the lead in fulfilling the projects. 
• To provide qualitative living in urban areas. The credit is given for improving the infrastructure and basic amenities of urban areas.
• To financially back the urban local bodies in planning, strategising and allocating the resources to complete the projects. 
• To increase the credit enhancement for the urban local bodies. With every project undertaken, the particular urban body is credited with credit enhancement scores. 
• To bring the local urban bodies to the forefront of development. When the urban areas are fully developed, there will be the availability of jobs, good health and homes. This, in turn, would push the nation’s growth.

Conclusion

The government of India continuously introduces policies to uplift various sectors and the economy. One such scheme is the Pooled Finance Development Fund Scheme or PFDF. This scheme has been introduced for the infrastructural development of the urban areas by providing the Urban Local Bodies with credit facilities.