Government To Infuse ₹6,000 Crore Equity Capital Into NIIF


The Union finance ministry is seeking approval for a ₹6,000 crore equity infusion into two subsidiaries of the National Infrastructure Investment Fund (NIIF).

The amount will be part of the ₹22,000 crore equity support promised for NIIF in Union budget 2020-21. The quasi-sovereign wealth fund will leverage this equity to raise funds for a ₹1 trillion national infrastructure pipeline (NIP).

The ministry is giving the final touches to the cabinet note, after which approval will be sought, the official said on condition of anonymity.

An increased focus on infrastructure projects is expected to help revive the economy battered by coronavirus. The ₹111-trillion investment plan to develop social and economic infrastructure over the next five years is in line with Prime Minister Narendra Modi’s vision of a $5-trillion economy.

“More reforms are expected as far as the implementation of NIP is concerned. For the first time, the government has involved private-sector financial entities and pension funds, and aims to tap banks, financial markets, global investors, financial entities and pension funds to suggest reforms and ways to proceed as far as infra projects are concerned. That’s why different panels have been set up to monitor the progress of the projects, eliminate delays and remove roadblocks,” the official said.

The Centre and states will contribute 39% and 40%, respectively, for the cost of these projects, while the private sector is expected to contribute 21%. The finance minister had earlier said that over the next few years, private sector funding is expected to increase.

In her budget speech, finance minister Nirmala Sitharaman said, “About ₹22,000 crore has already been provided, as support to infrastructure pipeline. This would cater for equity support to infrastructure finance firms such as IIFCL and a unit of NIIF.”

“This would create a major source of long-term debt for infrastructure projects and fulfil a long-awaited requirement,” she had said.

Sectors such as energy, roads, urban development and railways amount to around 71% of the projected infrastructure investments under NIP. Projects will also be spread across sectors such as irrigation, mobility, education, health, water and the digital sector.