In order to make Infrastructure a key growth driver of the Indian economy, the government has set up and is ready to launch the National Infrastructure Investment Fund (NIIF), with an initial corpus of at least Rs 40,000 crore along with two large overseas funds which are expected to sign commitments of at least $1billion each next month. Economic affairs secretary Shaktikanta Das said that the fund will invest in greenfield, brownfield as well as stalled projects.
Das said that while the government will invest Rs 20,000 crore in NIIF from the Budget, another Rs 20,000 crore is expected to come from private investors. Several sovereign funds and pension funds from Russia, Singapore, the UK and the UAE are willing to participate in the fund and cooperate with it at various levels. Russian Direct Investment Fund and Rusnano have held talks with government. The proposed fund is expected to play a key role in boosting investments in the infrastructure as private companies, which are saddled with debt and are not in a position to drive growth in the core sectors. Besides, the funds is expected to ease pressure on banks, which are facing severe stress from bad loans
The government is banking on the fund to kick-start the infrastructure sector and help script a strong economic recovery. The NIIF, announced in the budget, is set to be registered with Sebi and the final clearances are expected soon. In July, the Cabinet had approved creation of NIIF, a sort of sovereign fund, for development of infrastructure projects, including the stalled ones.
The government is looking for a CEO at a market-linked salary. The finance ministry had in October constituted a search-cum-selection committee under the chairmanship of economic affairs secretary Shaktikanta Das for selecting a CEO for the Investment Management Company, which operates under NIIF. India Infrastructure Finance Company (IIFCL) has been appointed as investment advisor to NIIF and IDBI Capital Market Services as advisor to NIIF Trustee, initially for six months and one year respectively. The Investment Management Company would be responsible for taking investment decision on behalf of NIIF. The government’s share in the corpus shall not exceed 49 per cent.
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