PROJECT SUSTAINABILITY GRANT FUND (PSGF)

The Government of Tamil Nadu is providing capital grant / viability gap funding to Urban Local Bodies (ULBs) with an objective to achieve financial sustainability of urban infrastructure projects which directly benefit urban population. The funding sources are mainly from the externally aided projects assisted by International Bank for Reconstruction and Development (The World Bank), German Development Bank (KfW), Japan International Cooperation Agency (JICA), Asian Development Bank (ADB) and by Government of Tamil Nadu (GoTN).

The Government of Tamil Nadu (GoTN) has created Project Sustainability Grant Fund (PSGF). The PSGF is a non lapsable fund created by GoTN to provide grant for implementing urban infrastructure projects in the State of Tamil Nadu. The Fund is operational from 1st April, 2015. The Fund is managed by Tamil Nadu Urban Infrastructure Financial Services Limited (TNUIFSL).

OBJECTIVES:

The PSGF is capital grant to support implementation of urban infrastructure projects and provide grant for operation of credit enhancement mechanism. The PSGF will be used to assist eligible applicants for the following:

• To provide capital grant for implementation of urban infrastructure projects which directly benefit the urban low income population.
• To provide viability gap funding with an aim to achieve financial sustainability of urban infrastructure projects which directly benefit urban population.
• To provide grant to operate credit enhancement mechanisms for issue of bonds, debt instruments and other borrowings.

SOURCES OF FUNDS

The corpus for the Fund will be provided by Government of Tamil Nadu through various sources as detailed below:

• The external aided projects assisted by World Bank, KfW, ADB, JICA and such other funding institutions through annual budgetary allocation, based on the lines of credit in operation.
• The transfer of available funds from Grant Fund-I under TNUDP III, KfW Grant Fund –I under SMIF-TN Program, SMIF-TN-II-1 Program, SMIF-TN-II-2 Program and JBIC Grant Fund-I under TNUIP to the PSGF.
• The interest from deposits, investments and any other income earned or accruing to the PSGF shall form part of its corpus and shall be applied for the objective for which the Fund is created.
• Other sources and means as ordered by the Government form time to time.

PERFORMANCE DURING 2023-24

A sum of Rs.325.00 crore (previous year Rs.104.45 crore) has been received from Government during the financial year 2023-24 and a sum of Rs.513.17 crore (previous year Rs.542.28 crore) has been disbursed to various ULBs during the financial year 2023-24.