NEW DELHI: The Union Cabinet on Wednesday approved a proposal to infuse Rs 6,000 crore into the National Investment and Infrastructure Fund (NIIF) over two years, a move which will help the entity raise Rs 1.10-lakh crore by 2025 for financing infrastructure projects.
The equity infusion will be sponsored by Aseem Infrastructure Finance Limited (AIFL) and NIIF Infrastructure Finance Limited (NIIF-IFL). “Of the Rs 100 lakh crore that been earmarked for infrastructure, nearly Rs 70 lakh crore is expected to come from the bond market and debt funds. Today’s decision is a start.
The government will provide Rs 6,000 crore; the National Investment Infrastructure Fund (NIIF) will provide Rs 7,000 crore equity and nearly Rs 1 lakh crore will be raised from the bond market,” Union Minister Prakash Javeladekar told reporters after the cabinet briefing. However, it comes with certain riders. “Only Rs 2,000 crore would be allocated during the current year 2020-21.
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,” the Union Ministry of Finance said in a statement. Javadekar also said that the AIFL will predominantly focus on under-construction, greenfield, and brownfield assets with less than one year of operations, whereas NIIF IFL will operate as a take-out vehicle for mature operating assets.
The move will also help relieve the exposure of banks to infrastructure projects and free up space for new green-field projects. “The decision will take care of the financial needs of planned infra projects. It shows the world that they can believe in India’s development and that they can be a part of it,” said Javadekar. The proposal is a part of the Aatmanirbhar Bharat package.