NEW DELHI: To back the new and stressed infrstructural projects in the country, the government Rs 40,000 crore National Investment and Infrastructure fund (NIIF) has been set up and its chief executive will be finalised by January end, said Finance Minister Arun Jaitley on Tuesday.
The move is a big positive for infrastructure companies at a time when the banks are burdened by bad debt and the country needs massive investments to build roads, power plants and public transportation services.
Several sovereign and pension funds including those of Singapore, UAE and Russia have shown interest in the National Investment and Infrastructure Fund, Jaitley said. There could be several arms of the Rs 40,000 crore fund for supporting various infrastructure projects and these foreign funds could invest in them as well, he added.
“An important step which is now being taken is the appointment of CEO of fund for which position has been advertised both nationally and internationally. We hope selection process will be completed in next few weeks,” Jaitley said after the first meeting of the NIIF Governing Council.
India Infrastructure Finance Company Ltd (IIFCL) has been appointed as the investment advisor and IDBI Capital Market Services Ltd as Advisor to NIIF Trustee Ltd initially for six months and one year respectively.
Recovery in economic activity remains tentative and narrowly focussed, while financing of infrastructure projects may be a constraint to the pace of execution next fiscal, rating agency ICRA said.
“Notwithstanding some impending boost to consumer sentiment post revision in salaries and pensions of government employees, capacity expansion will significantly lag project announcements. Availability of budgetary outlays for financing of infrastructure may emerge as a constraint to the pace of execution in 2016-17,” ICRA said in its economic update.
Despite clearances facilitated by the Cabinet Committee on Investment, the value of revived projects stood at a marginal Rs 0.1 trillion in the second quarter of 2015-16, ICRA noted.
The Finance Minister said the NIIF Governing Council will meet again in March to review the progress in the participation of the funds that are willing to invest. While the government will invest Rs 20,000 crore in NIIF from the Budget, another Rs 20,000 crore is expected to come from private investors. The NIIF would invest in greenfield, brownfield and stalled projects.
The capital market regulator Sebi has also approved the setting up of the NIIF. The Investment Management Company would be responsible for taking investment decision of NIIF corpus. The government's share in the corpus shall not exceed 49 per cent.
The Governing Council in its meeting on Tuesday also noted the possible projects that may be taken up under the NIIF. Jaitley is the chairman of the council, and its members include economic affairs secretary Shaktikanta Das, financial services secretary Anjuly Chib Duggal and SBI Chairperson Arundhati Bhattacharya, among others.