Cabinet approved Rs 6,000 Crore Infusion into NIIF Debt Platform

The union cabinet has approved the infusion of ₹6,000 crore equity in the National Infrastructure Investment Fund’s (NIIF’s) debt platform on November 25, 2020. This is to be done over the current and the next fiscal so as to drive the creation of infrastructure in India.

Highlights

  • Out of Rs 6000, Rs 2,000 crore will be used in 2020-2021 fiscal year.
  • Remaining of Rs 4,000 crore will be used in the fiscal year 2021-2022.

Role of NIIF

  • The NIIF would be taking the necessary steps to use the equity investments from the domestic and the global pension funds and sovereign wealth funds.
  • NIIF would be leveraging this allocated equity so as to raise ₹1.1 trillion in the next five years.
  • The raised capital would be used to finance the infrastructure projects under the national infrastructure pipeline (NIP).

Background

The announcement for the infusion was made on November 12, 2020 by the Finance minister Nirmala Sitharaman as a part of third economic stimulus called the Aatmanirbhar Bharat 3.0.

Significance

The proposal seeks for the direct investment by the Government of India to  scale the potential and impact of the two entities in the infrastructure debt financing. It would also support the efforts of the platform so as to raise international equity. The equity infusion by the government, NIIF SOF and potential equity participation from the private sector, the debt platform would raise enough resources. The raised resources will extend the debt support of ₹1.1 trillion to projects by the year 2025.

National Investment and Infrastructure Fund (NIIF)

NIIF is first infrastructure specific investment fund of India. This fund was set by the Government of India in February 2015. The fund was set with an objective of   maximizing the economic impact through the infrastructure investment in commercially viable projects.