The government plans to set up a Credit Enhancement fund to support infrastructure projects that are rated below ‘AA’.
- The Credit Enhancement fund will enable lower rated projects to raise loans at better rates while improving their viability.
- Since institutional investors put in money only in top-rated infrastructure projects, augmenting ratings of projects that are otherwise viable, but do not have early cash flows, would help in attracting investors.
- The Credit Enhancement fund can be jointly run and managed by the government and private sector sector companies just on the lines of the National Investment and Infrastructure Fund.
- Most of the infrastructure projects are rated below ‘AA’; it means large institutions do not fund such projects. Through credit enhancement, a borrower or a bond issuer tries to improve its credit worthiness, which helps in lowering interest outgo.
- The fund provides partial guarantee against loan losses to the lenders, enabling the borrower to enhance its credit ratings.
What is Credit Enhancement Fund:
- CEF will provide credit enhancement for infrastructure projects which will help in upgrading credit ratings of bonds issued by infrastructure companies and insurance funds.
- A business that engages in credit enhancement is providing reassurance to a lender that it will honor its obligation. This can be achieved in various ways:
– By providing additional collateral
– By obtaining insurance guaranteeing payment
– By arranging for a third-party guarantee
- The company might also increase its cash reserves or take other internal measures to demonstrate its ability to pay its debts.
- Credit enhancement reduces the credit risk/default risk of the company’s debt and makes it eligible for a lower interest rate.
Arrested Landing Of LCA Tejas
The Light Combat Aircraft (LCA), Tejas successfully landed on INS Vikramaditya and became the first indigenous aircraft to make an arrested landing on a naval ship.
- India enters a select group of nations in the world to develop aircrafts that are capable of landing and taking off from an aircraft carrier deck thatis barely 200 metres wide.
- The elite countries that hold this capability includes US, China, UK, Russia and France.
- The regular LCA needs a 1 km of run way to make its landing and this naval variant is capable to make its landing in a far less landing space, 100 metres and take off space of 200 metres.
About LCA Tejas:
- It is the smallest lightweight, multi-role, single-enginesupersonic tactical fighter aircraft in the world and is being developed in single-seat fighter and twin seat trainer variants for the Indian Air Force and Indian Navy.
- It has quadruplex digital fly-by-wire Flight Control System (FCS) with
associated advanced flight control laws.
- The aircraft with delta wing is designed for ‘air combat’ and ‘offensive air support’ with ‘reconnaissance’ and ‘anti-ship’ as its secondary roles.
- Extensive use of advanced composites in the airframe gives a high strength to weight ratio, long fatigue life and low radar signatures.
- It is designed to carry a variety of air-to-air, air-to- surface, precision guided and standoff weaponry.
- It is jointly developed by Aeronautical Development Agency and Hindustan Aeronautics Limited.
The LCA programme was launched in the early 1980’s for two primary purposes.
- The principal and most obvious goal was the development of a replacement aircraft for India’s ageing MiG-21 fighters.
- The other main objective was to give an impetus for an across-the-board advancement of India’s domestic aviation capability.