Viability Gap Funding
- There are many projects with high economic returns, but the financial returns may not be adequate for a profit-seeking investor.
- For instance, a rural road connecting several villages to the nearby town.
- This would yield huge economic benefits by integrating these villages with the market economy, but because of low incomes it may not be possible to charge user fee.
- In such a situation, the project is unlikely to get private investment.
- In such cases, the government can pitch in and meet a portion of the cost, making the project viable.
- This method is known as viability gap funding.