National Investment and Infrastructure Fund

The National Investment and Infrastructure Fund, India’s first sovereign wealth fund, was formed by the Indian government. This article introduces NIIF, briefly discusses the concept behind it, and provides details on the goals, categories, and investors in NIIF. It was established to provide infrastructure investment to boost the economic effect of projects that are commercially feasible (Greenfield Projects and Brownfield Projects). Former Indian Finance Minister Arun Jaitley discussed the notion of creating the NIIF in the Union Budget for 2015–2016. The National Investment and Infrastructure Fund (NIIF) was authorised by the Department of Economic Affairs in August 2015.

National Investment and Infrastructure Fund

Large-scale, long-term investment is necessary for projects like smart cities, dedicated freight corridors, high-speed rails, etc. Where does this money originate? In the 2015 budget, the Indian government announced the creation of the National Investment and Infrastructure Fund (NIIF). In the end, the fund was established in December 2015. Both domestic and foreign investors are sought after by the Fund.

• The National Investment and Infrastructure Fund (NIIF) was established by the Indian government to improve the nation’s infrastructure financing.
• As an alternative investment fund, NIIF has previously received approval from the Securities and Exchange Board of India (SEBI).
• The National Investment and Infrastructure Fund (NIIF) Limited has been properly accredited to serve as the National Investment and Infrastructure Fund’s investment manager after being duly incorporated as a company under the Companies Act, 2013.
• A further Rs 20,000 crore is anticipated from private investors on top of the Rs 20,000 crore the government will contribute to the NIIF through the budget.
• The government’s corpus share of the NIIF is expected to be less than 50%.

Issues with infrastructure sector

• Sector needs long-term financing, but banks are powerless to provide it. The absence of long-term financing is one of the main reasons why Indian infrastructure is still not at the expected level. This is despite the fact that in 2015, 10.4% of bank financing went into infrastructure.
• But as of late, non-performing assets and stressed assets, which total about 4.5 percent and 11 percent, respectively, are putting tremendous pressure on Indian banks, particularly the public sector banks.
• As a result, the banks have been compelled to remain in a shell and refrain from investing in long-term financing portfolios and projects with lengthy gestation periods.
• The government of India announced the creation of the National Investment and Infrastructure Fund in the 2015 budget in response to this financial scenario.
• The NIIF will provide funding for a longer window of 20 years or more through its pass-throughs, including the National Housing Bank and the IRFC.

NIIF as fund of funds

• A fund of funds is NIIF. As a result, there will be numerous alternative investment funds below.
• A stressed-assets fund, a fund for renewable energy, and a fund for brownfield projects might all be supported by the NIIF.

NIIF WORK

• The Trust could raise debt with the corpus of Rs. 40K crore.
• On a long-term basis, NIIF would raise up to 10 times the corpus, or up to Rs 2 lakh crore.
• Through infrastructure finance organisations like IRFC (Indian Railway Finance Corporation) and NHB, it may invest in stock (National Housing Bank).
• The infrastructure finance businesses can then multiply the leverage of this additional stock.

National Investment and Infrastructure Fund (NIIF)

• Equity (capital) to Financial Institutions (FIs)/Non-Banking Financial Companies (NBFCs) that specialise in financing infrastructure. These institutions will be able to use this equity backing as leverage to lend money to the chosen projects.
• Invest in funds with a focus on the infrastructure sector that are run by Asset Management Companies (AMCs) to finance public or unlisted companies with equity or quasi-equity.
• gives money to commercial initiatives, both greenfield and brownfield, directly, even stalled projects. According to a government official, the NIIF could first take on some important transportation projects for finance.
• Greenfield projects are those that are unrestricted by limitations imposed by earlier activity. simply puts: a fresh endeavour.
• A site that has previously been utilised for industrial or other purposes is referred to as a “brownfield.” Brownfield projects are just those that are already underway or are inactive.

Conclusion

The National Investment and Infrastructure Fund (NIIF), which was established by the Indian government in February 2015, is the country’s first infrastructure-specific investment fund or sovereign wealth fund. This fund’s major goal was to invest in commercially viable infrastructure projects, both greenfield and brownfield, in order to maximise economic impact. The NIIF will provide funding for a longer window of 20 years or more through its pass-throughs, including the National Housing Bank and the IRFC.