Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.
From UPSC perspective, the following things are important:
Prelims level: NIIF, Strategic Investment Fund
Mains level: Government initiatives for reviving infrastructure sector and providing required capital to the sector.
Strategic Investment Fund (under NIIF)
- Three funds have been established by the Government under the NIIF platform and registered with SEBI as Category II Alternative Investment Funds.
- NIIF II (“Strategic Fund”) is one of those three funds. The other two funds are NIIF (or Master Fund) and NIIF Fund of Funds – I.
- The objective of this strategic fund is to invest largely in equity and equity-linked instruments.
- It will focus on green field and brown field investments in the core infrastructure sectors.
- The NIIF Funds work on a model whereby equity participation from strategic partners (including overseas sovereign / quasi-sovereign / multilateral / bilateral investors) is invited, alongside Government’s contribution.
- Government’s contribution / share in the corpus will be 49% in each entity set up as an AIF and will neither be increased beyond, nor allowed to fall below 49%.
- The whole of 49% would be contributed by the Government of India directly.
National Investment and Infrastructure Fund (NIIF)
- National Investment and Infrastructure Fund (NIIF) is a fund created by the Government of India for enhancing infrastructure financing in the country.
- This is different from the National Investment Fund.
- Objective: to maximize economic impact mainly through infrastructure development in commercially viable projects, both greenfield and brownfield, including stalled projects. It could also consider other nationally important projects, for example, in manufacturing, if commercially viable.
- NIIF was proposed to be set up as a Trust, to raise debt to invest in the equity of infrastructure finance companies such as Indian Rail Finance Corporation (IRFC) and National Housing Bank (NHB).
- NIIF is envisaged as a fund of funds with the ability to make direct investments as required. As a fund of fund it may invest in other SEBI registered funds.
- The functions of NIIF are as follows:
- Fund raising through suitable instruments including off-shore credit enhanced bonds, and attracting anchor investors to participate as partners in NIIF;
- Servicing of the investors of NIIF.
- Considering and approving candidate companies/institutions/ projects (including state entities) for investments and periodic monitoring of investments.
- Investing in the corpus created by Asset Management Companies (AMCs) for investing in private equity.
- Preparing a shelf of infrastructure projects and providing advisory service