Cabinet clears Rs 6,000 cr for NIIF

The Cabinet on Wednesday approved Rs 6,000 crore capital infusion in National Investment and Infrastructure Fund (NIIF), government-backed entity created to provide long-term capital to the infrastructure sector.

The government would infuse Rs 6,000 crore in the NIIF debt platform in the next two years to help it raise up to Rs 1.10 lakh crore for investments, minister of information and broadcasting Prakash Javadekar said after the Cabinet meeting.

Finance minister Nirmala Sitharaman had already announced about the capital infusion proposal on November 12 while unveiling the third stimulus package -- AatmaNirbhar Bharat 3.0 -- to boost the economy. The Cabinet on Wednesday gave it a formal approval.

The Cabinet approved equity infusion in the debt platform sponsored by NIIF comprising of Aseem Infrastructure Finance Limited (AIFL) and NIIF Infrastructure Finance Limited (NIIF-IFL), subject to certain condition, an official statement said.

AIFL will predominantly focus on under construction, Greenfield and brownfield assets with less than one year of operations. NIIF IFL will operate as a take-out vehicle for mature operating assets. It will help infrastructure investors in replacing high cost bank finance with cheaper IDF finance post-commissioning, it said.

As per the approval, only Rs 2,000 crore would be allocated in 2020-21, it said. “However, in view of the unprecedented financial situation and availability of limited fiscal space due to the prevailing Covid-19, the proposed amount may be disbursed only if there is readiness and demand for debt raising,” it added.

“NIIF will take all necessary steps to use the equity investments from domestic and global pension funds and sovereign wealth funds expeditiously,” it added.

The NIIF Strategic Opportunities Fund (NIIF SOF) has already set up NBFC Infra Debt Fund and NBFC Infra Finance Company. NIIF, through its Strategic Opportunities Fund has invested Rs.1,899 crore.

The capital infusion by the government will further scale up the potential and impact of the two entities in the infrastructure debt financing space, it added.

“This will also support the efforts of the platform to raise international equity. With the fresh infusion of equity by the government, besides the equity already infused by NIIF SOF and potential equity participation from the private sector, the debt platform is expected to raise enough resources to extend debt support of Rs 1,10,000 crore to projects by 2025,” the statement said.

As per the National Infrastructure Pipeline (NIP), investment in infrastructure sector is targeted at Rs 111 lakh crore over the next 5 years across various sub-sectors, creating substantial need for debt financing. This would require at least Rs 60-70 lakh crore in debt financing, it said.