Govt. allots ₹2,000-cr. for infra funding

#GS3 #ECONOMY #INFRASTRUCTURE

The Cabinet approved the infusion of ₹6,000 crore as equity into a new debt platform to raise up to ₹1.1 lakh crore for financing infrastructure projects by 2025.

 

Stimulus measure

  • Finance Minister announced the plan to provide equity capital to the debt platform sponsored by the National Investment and Infrastructure Fund (NIIF), as part of the last round of stimulus measures.
  • The decision would strengthen India’s bond markets, and another ₹7,000 crore would be raised as equity for the debt platform, with the bond markets set to be tapped for ₹1 lakh crore.

 

Global capital

  • The NIIF to take all necessary steps to use equity investments from domestic and global pension funds and sovereign wealth funds expeditiously
  • Several sovereign wealth funds had evinced interest in availing the tax concessions offered for them to invest in the country.
  •  This will act as a catalyst in attracting more investments into the infrastructure sector as envisaged in the National Infrastructure Pipeline, this would help free up space for banks to lend to new Greenfield projects.
  • The Swell-capitalised, well-funded and well-governed NIIF debt platform can play a major role in infrastructure financing and development of bond market in India by acting as a AAA/AA-rated intermediary between the bond markets and infrastructure projects and companies.

National Investment and Infrastructure Fund

  • NIIF is India’s first infrastructure specific investment fund that was set up by the Government of India in February 2015. 
  • The objective behind creating this fund was to maximize economic impact mainly through infrastructure investment in commercially viable projects, both Greenfield and Brownfield.
  • It was proposed to be established as an Alternative Investment Fund to provide long tenor capital for infrastructure projects with an inflow of Rs. 20,000 crore from the Government of India.
  • NIIF was approved in August 2015 by the Department of Economic Affairs
  • First meeting of its governing council was held in December 2015 further to which it was registered with SEBI as Category II Alternative Investment Fund.
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