The cabinet on Wednesday approved the contours of the proposed National Investment and Infrastructure Fund (NIIF), in which the government would hold 49% equity and the balance would be offered to strategic anchor partners such as multilateral institutions.
The NIIF, being set up with the aim to catalyse infrastructure development in the country, would have an initial authorised capital of R20,000 crore, according to a statement issued by the government.
“The contribution of the government to the NIIF would enable it to be seen virtually as a sovereign fund and is expected to attract overseas sovereign, quasi-sovereign, multilateral and bilateral investors to co-invest in it,” the government said.
The NIIF would be set up as a trust or other legal entity from both the point of view of taxation and flexibility.
The NIIF would provide equity support to non-bank finance companies and financial institutions engaged in infrastructure financing to across sectors. It would also extend equity and debt support to commercially viable infrastructure and other projects.
Besides the government, cash-rich PSUs would also contribute to the NIIF, over and above the government’s 49% equity. The fund may also utilise proceeds of monetised land and other assets of PSUs. Domestic pension funds and National Small Savings could also provide funds to NIIF.
The NIIF would be incorporated within two months after the cabinet approval. Announcing the setting up of the NIIF in the budget in February, finance minister Arun Jaitley had said he would find resources to ensure an annual flow of R20,000 crore to it.