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NIIF: Much awaited infra fund delayed but to start soon
It is already six months into the current financial year, but the much-awaited Rs 40,000-crore National Infrastructure Investment Fund (NIIF) is yet to start operations. According to top government officials, the complex structure of the fund is the main reason for the delay.
It is already six months into the current financial year, but the much-awaited Rs 40,000-crore National Infrastructure Investment Fund (NIIF) is yet to start operations.
According to top government officials, the complex structure of the fund is the main reason for the delay.
However, while speaking to HT, economic affairs secretary Shaktikanta Das said the delay was unavoidable as the fund had to be restructured, following investor concerns over putting money in a general investment fund. “We came to know of this only after holding a few meetings with various possible investors…so we had to restructure the fund and that took time. But a lot of work has been done and now it is ready to take off.”
Jayant Sinha, minister of state for aviation, who earlier MoS finance, had said that the fund would be operational by the end of 2015-2016. The fund is now likely to be operational by the end of this year.
Incorporated under the Companies Act 2013, NIIF, which is India’s first sovereign wealth fund, has been facing varied problems since its inception. Private investors and sovereign funds have raised several concerns about the functioning of the fund. In fact, following investor concerns over putting in money into stalled projects in the initial years, the government excluded stressed projects out of the fund’s ambit, at least for the first few years.
Also, initially, investors have refused to put money in a general fund, and wanted to invest in dedicated sub funds for specific projects. The government holds 49% in NIIF, while private investors hold the rest.
While the government will invest Rs 20,000 crore in the fund, the remaining amount will come from private investors, including foreign sovereign wealth funds, pensions funds and multilateral agencies. The money will be put into commercially viable and stalled projects.
Jayant Sinha, minister of state for aviation, who earlier was earlier MoS finance, had said that the fund would be operational by the end of 2015-2016.
“There were also concerns about intervention by the triple Cs” said an official in the government, who did not wish to be identified, while referring to probes by the CBI, CAG and CVC. “The government keeping its stake below 49% will ensure that there’s no undue interference” said another source.
Finance minister Arun Jaitley recently said that India needs at least $1 trillion investment in infrastructure to expand the economy. “The PPP (public-private partnership) momentum has reduced drastically and the increased thrust on public expenditure is insufficient for the vast investment needs. Therefore, structures like NIIF are critical for mobilising private capital,” said Vinayak Chatterjee, chairman of Feedback Infra.
