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Subject: Economics

  • Trans-shipment Terminal at Great Nicobar: strategic imperative and ecological concerns

    nicobar

    The Ministry of Environment, Forest and Climate Change gave environmental clearance for the ambitious Rs 72,000 crore development project on the strategically important Great Nicobar Island.

    About the Great Nicobar Development Project

    • A “greenfield city” has been proposed, including an:
    1. International Container Transhipment Terminal (ICTT),
    2. Greenfield international airport,
    3. Power plant, and
    4. Township for the personnel who will implement the project
    • The project is to be implemented in three phases over the next 30 years.

    When was the project incepted?

    • The proposal to develop Great Nicobar was first floated in the 1970s, and its importance for national security and consolidation of the Indian Ocean Region has been repeatedly underlined.

    Scope of the project

    • A total 166.1 sq km along the southeastern and southern coasts of the island have been identified for project along a coastal strip of width between 2 km and 4 km.
    • Some 130 sq km of forests have been sanctioned for diversion, and 9.64 lakh trees are likely to be felled.
    • Development activities are proposed to commence in the current financial year, and the port is expected to be commissioned by 2027–28.
    • More than 1 lakh new direct jobs and 1.5 lakh indirect jobs are likely to be created on the island over the period of development.

    Features of the Project

    • Transshipment hub of the East: The proposed port will allow Great Nicobar to participate in the regional and global maritime economy by becoming a major player in cargo transshipment.
    • Naval control: The port will be controlled by the Indian Navy, while the airport will have dual military-civilian functions and will cater to tourism as well.
    • Urban amenities: Roads, public transport, water supply and waste management facilities, and several hotels have been planned to cater to tourists.

    Why need such project?

    • Geostrategic advantage: The Island has a lot of tourism potential, but the government’s greater goal is to leverage the locational advantage of the island for economic and strategic reasons.
    • Critical shipping chokepoint: Great Nicobar is equidistant from Colombo to the southwest and Port Klang and Singapore to the southeast, the region through which a very large part of the world’s shipping trade passes.
    • Huge source of revenue: The proposed ICTT can potentially become a hub for cargo ships travelling on this route.
    • Countering Chinese presence: Increasing Chinese assertion in the Bay of Bengal and the Indo-Pacific has added great urgency to this imperative in recent years.

    Malacca Dilemma

    In recent years, China’s efforts to expand its footprint in the Indian Ocean Region to overcome its ‘Malacca Dilemma’ (China’s fear of a maritime blockade at the Straits of Malacca) and fulfil its ‘Maritime Silk Road’ ambitions have fuelled apprehensions about freedom of navigation in these waters.

    Issues with the Project

    • Ecological damage: The proposed massive infrastructure development in an ecologically important and fragile region, including the felling of almost a million trees, has alarmed many environmentalists.
    • Threats to marine ecosystem: The loss of tree cover will not only affect the flora and fauna on the island, it will also lead to increased runoff and sediment deposits in the ocean, impacting the coral reefs in the area.

    Damage control measures by the govt

    • India has successfully translocated a coral reef from the Gulf of Mannar to the Gulf of Kutch earlier.
    • The Zoological Survey of India is currently in the process of assessing how much of the reef will have to be relocated for the project.
    • The government has said that a conservation plan for the leatherback turtle is also being put in place.
    • The project site already is outside the eco-sensitive zones of Campbell Bay and Galathea National Park.

    Conclusion

    • Given its physical location, the A&N Islands are the natural platform for collaboration between India and Southeast Asia.
    • By most accounts, political will in India and other countries to develop these islands is high.

    Back2Basics: Great Nicobar Islands

    • Great Nicobar, the southernmost of the Andaman and Nicobar Islands, has an area of 910 sq km.
    • It has tropical wet evergreen forests, mountain ranges reaching almost 650 m above sea level, and coastal plains.
    • The A&N Islands are a cluster of about 836 islands in the eastern Bay of Bengal, the two groups of which are separated by the 150-km wide Ten Degree Channel.
    • The Andaman Islands lie to the north of the channel, and the Nicobar Islands to the south.
    • Indira Point on the southern tip of Great Nicobar Island is India’s southernmost point, less than 150 km from the northernmost island of the Indonesian archipelago.
    • Great Nicobar is home to two national parks, a biosphere reserve, and the Shompen and Nicobarese tribal peoples, along with ex-servicemen from Punjab, Maharashtra, and Andhra Pradesh who were settled on the island in the 1970s.

     

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  • Centre sets ‘standard’ for product Reviews on E-Commerce Platforms

    review

    The Centre is bringing out a standard for publishing product reviews for e-commerce platforms this week.

    What are the reviews on e-com platforms?

    • Reviews are the ratings given by customers who make any purchase on the e-commerce platform.
    • This is generally a star-rating system followed by user comments.
    • It is particularly a social proof given by people who make judgments and decisions based on the collective actions of others.

    Why do e-coms take such reviews?

    • Reviews are much more than just comments and can result in relevant content and information, both for you and your customers.
    • Since the biggest disadvantage of e-commerce is not offering the possibility for consumers to be face to face with the product, reviews can break this barrier.
    • Reviews can help sell more, gain new customers, accompany the consumer’s satisfaction, and target better.

    Why reviews matter?

    • Ensure a good purchasing experience;
    • Create surveys and debates on products and/or services;
    • Provide a field for comments and instigate interaction;
    • Know how to deal with complaints and try to resolve them.

    Why discuss this?

    • Consumer grievances ignored: More than one in two (58 per cent) consumers complain that their negative product ratings and reviews are not being published by e-commerce platforms.
    • Positive bias: Only 23 per cent consumers said that their negative reviews or ratings on e-commerce sites were published as it is.
    • Fake and deceptive reviews: Wasteful products are highly publicised with fake reviews and praises.

    What are the standards set out by the govt.?

    The framework for the standard was prepared by the Bureau of Indian Standards (BIS). It is titled IS 19000:2022.  The outlines are-

    • Guiding principle: The guiding principles of the standard are integrity, accuracy, privacy, security, transparency, accessibility and responsiveness.
    • Voluntary compliance: To start with voluntary, the standard could become mandatory after observing compliance to the standards by such platforms.
    • Grievance redressal: Once made mandatory, a consumer may submit grievances to the National Consumer Helpline, Consumer Commissions, or the CCPA, against misleading reviews.
    • Punishment: If made mandatory, the violation of the standard, can invite punishment for unfair trade practice or violation of consumer rights.
    • Review authentication: The standard prescribes specific responsibilities for the review author and the review administrator. For the review author, these include confirming acceptance of terms and conditions, providing contact information.
    • Consumer data protection: For review administrator, these include safeguarding personal information and training of staff.
    • Traceability and genuineness of the review author: The standard also provides for methods for verification of the review author through email address, identification by telephone call or SMS, confirming registration by clicking on a link, using captcha system.

    Significance of the standards

    • The standard is expected to benefit all stakeholders in the e-commerce ecosystem, that is, consumers, e-commerce platforms, sellers, etc.
    • It will help usher in confidence among consumers to purchase goods online and help them take better purchase decisions.

     

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  • CDSL: India’s registered share depository

    Certain services at CDSL (Central Depositories Services India Ltd) were disrupted due to a suspected cyber-attack over the weekend.

    What is CDSL?

    • CDSL, or Central Depositories Services India Ltd, is a government-registered share depository, alongside its other state-owned counterpart National Securities Depository Ltd (NSDL).
    • It was founded in 1999.
    • It is a Market Infrastructure Institution or MII that is deemed as a crucial part of the capital market structure, providing services to all market participants, including exchanges, clearing corporations, depository participants, issuers and investors.
    • Share depositories hold shares in an electronic or dematerialised form and are an enabler for securities transactions, playing a somewhat similar role to what banks play in handling cash and fixed deposits.
    • While banks help customers keep their cash in electronic form, share depositories help consumers store shares in a dematerialised form.

    Functions of CDSL

    • CDSL facilitates holding and transacting in securities in the electronic form and facilitates settlement of trades done on stock exchanges.
    • These securities include equities, debentures, bonds, Exchange traded Funds (ETFs), units of mutual funds, units of Alternate Investment Funds (AIFs), Certificates of deposit (CDs), commercial papers (CPs), Government Securities (G-Secs), etc.

     

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  • India’s Soft Loans to neighbours up to $15 billion

    The volume of India’s soft loans to neighboring countries has increased from about $3 billion to almost $15 billion in the last eight years.

    What are Soft Loans?

    • A soft loan is a loan with no interest or a below-market rate of interest.
    • Also known as “soft financing” or “concessional funding,” soft loans have lenient terms such as-
    1. Namesake interest rate
    2. Extended grace periods in which only interest or service charges are due
    3. Interest holidays
    4. Long tenure up to 50 years
    • Soft loans are often made by multinational development banks such as the Asian Development Fund affiliates of the World Bank etc.

    Why are soft loans popular?

    • Diplomatic tool: Soft loans are often offered not only as a way to support developing nations but also to form economic and political ties with them.
    • Economic benefit: Nations exchange credit in return of some important resources.
    • Geopolitics: Soft loans have been an important diplomatic tool to sustain political influence in the neighborhood and beyond as well as counter the growing Chinese presence, especially in Africa.

    Pros and cons of Soft Loans

    • Pro: Breaks for Business– Soft loans offer favorable business opportunities.
    • Con: Shaky Returns– The length of time it may take to repay a soft loan could mean the lender is tied to the borrower for an extended number of years.

    Did India take any soft loan?

    • For instance, in 2015, Japan offered a soft loan to India to cover 80% of the cost for a $15 billion fund a bullet train project at a less than 1% interest rate.
    • This was done with the caveat that India would purchase 30% of the equipment for the project from Japanese companies.
    • By the time the countries signed a formal agreement, Japan’s commitment increased to 85% of the cost, in the form of soft loans, for a then-estimated $19 billion project cost.

    Using soft loans as a diplomatic tool

    • The amount of development assistance India has offered to other nations in 2019-20 was more than twice what it had extended in 2011-12.
    • However, such loans have usually gone to countries in Asia, Africa and Latin America that are lower down the economic strength ladder.
    • India has extended a total of $27.8 billion in lines of credit since 2002-03.

    Conclusion

    • Extending development assistance is nothing new for India and about half of the foreign ministry’s budget is made up of grants and loans to foreign governments, especially India’s neighbours.
    • For a country that for long had to rely on international loans to meet key development goals, India understands the diplomatic value of providing a helping hand.

     

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  • 67% drop in PM-KISAN pay-out in 3 years

    pm kisan

    The number of farmers who received the 11th installment of funds from the Prime Minister’s Kisan Samman Nidhi (PM-KISAN) had fallen by 67%.

    What is PM-KISAN?

    • The PM-KISAN Yojana is a government scheme through which, all small and marginal farmers will get up to Rs 6,000 per year as minimum income support.
    • It is a Central Sector scheme with 100% funding from GoI. It has become operational since 1st December 2018.
    • Under the PM-KISAN scheme, all landholding farmers’ families shall be provided with the financial benefit of Rs. 6000 per annum per family payable in three equal instalments of Rs. 2000 each, every four months.
    • The definition of the family for the scheme is husband, wife, and minor children.
    • State Government and UT administration will identify the farmer families which are eligible for support as per scheme guidelines.
    • The fund will be directly transferred to the bank accounts of the beneficiaries.

    Note: Aadhaar was made optional for availing the first instalment (December 2018 – March 2019). But now it is mandatory.

    Who are NOT eligible for PM-KISAN?

    The following categories of beneficiaries of higher economic status shall not be eligible for benefit under the scheme.

    • All Institutional Landholders

    Farmer families that belong to one or more of the following categories:

    • Former and present holders of constitutional posts
    • Former and present Ministers/ State Ministers and former/present Members of Lok Sabha/ Rajya Sabha/ State Legislative Assemblies/ State Legislative Councils, former and present Mayors of Municipal Corporations, former and present Chairpersons of District Panchayats.
    • All serving or retired officers and employees of Central/ State Government Ministries
    • All superannuated/retired pensioners whose monthly pension is Rs.10,000/-or more. (Excluding Multi-Tasking Staff / Class IV/Group D employees) of the above category
    • All Persons who paid Income Tax in the last assessment year
    • Professionals like Doctors, Engineers, Lawyers, Chartered Accountants, and Architects registered with Professional bodies and carrying out the profession by undertaking practices.

    Note: It is not so easy to remember all such exclusions. But one must be able to recognize them by applying pure logic and thumb rule. This can be well understood from the PYQ given.

    Plus, West Bengal is yet to implement the PM-KISAN scheme while the farmers have completed their registrations!

    Why in news?

    Ans. Fall in number of beneficiaries

    • PM Kisan was one of the largest Director Benefits Transfer schemes in the world and certain higher income categories of farmer families were excluded from the benefits.
    • But 67% reduction in overall beneficiaries clearly points to exclusion of eligible beneficiaries too.
    • Only about three crore farmers in India had received all the 11 instalments.

    How are states responsible?

    • The responsibility of maintaining the data of beneficiaries, remained with the States.
    • The Scheme extensively uses digital technologies to verify eligibility of farmers.
    • States/ UTs upload the data of eligible farmers after verification of the farmers, in terms of eligibility and exclusion criterion prescribed under the scheme.
    • The data of farmers so uploaded by States goes through several validations, through the portals of UIDAI, PFMS, Income Tax Portal and NPCI.

    Try this PYQ:

    Q.Under the Kisan Credit Card Scheme, short-term credit support is given to farmers for which of the following purposes? (CSP 2020)

    1. Working capital for maintenance of farm assets
    2. Purchase of combine harvesters, tractors and mini trucks
    3. Consumption requirements of farm households
    4. Construction of family house and setting up of village cold storage facility
    5. Construction of family house and setting up of village cold storage facility

    Select the correct answer using the code given below:

    (a) 1,2 and 5 only

    (b) 1,3 and 4 only

    (c) 2,3,4 and 5 only

    (d) 1, 2, 3 and 4

     

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  • A&N’s first application for GI tag for the Nicobari Hodi Craft

    hodi

    The Geographical Indications Registry at Chennai, has received an application from the Tribal Development Council, Andaman & Nicobar Islands, seeking the GI tag for the Nicobari hodi craft.

    Why in news?

    About Nicobari Hodi Craft

    • The hodi is the Nicobari tribe’s traditional craft.
    • It is an outrigger canoe, very commonly operated in the Nicobar group of islands.
    • The hodi is built using either locally available trees or from nearby islands, and its design varies slightly from island to island.
    • Hodis are used for transporting people and goods from one island to another, for sending coconuts, for fishing and racing purposes.
    • The tuhet, a group of families under a headman, consider the hodi an asset.
    • Hodi races are held between islands and villages.
    • The technical skills for building a hodi are based on indigenous knowledge inherited by the Nicobarese from their forefathers.

    How many GI tags have been accorded so far?

    • The Geographical Indications Registry, established in Chennai in September 2003, has received over 1,000 applications.
    • An application seeking GI tag for the Banaras’ thandai (a beverage made with milk, dry fruits and spices) was the 1,000th application.
    • Data shows that, as on date, around 1,015 applications have been filed at the Chennai office and of them, GI tags have been given to 422 products.

    Back2Basics:  Geographical Indication

    • A GI is a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.
    • Nodal Agency: Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry
    • India, as a member of the World Trade Organization (WTO), enacted the Geographical Indications of Goods (Registration and Protection) Act, 1999 w.e.f. September 2003.
    • GIs have been defined under Article 22 (1) of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.
    • The tag stands valid for 10 years.

     

     

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  • Everything you need to know about ‘Friendshoring’

    friendshoring

    In her visit to India last week, US secretary of treasury Janet Yellen reiterated her country’s stance of pushing for “friendshoring” to diversify away from countries that present geopolitical risk.

    What is Friendshoring?

    • Friendshoring is a strategy where a country sources the raw materials, components and even manufactured goods from countries that share its values.
    • The dependence on the countries considered a “threat” to the stability of the supply chains is slowly reduced.
    • It is also called “allyshoring”.
    • Apple’s announcement to shift its iPhone manufacturing facilities from China to India.

    US push for friendshoring

    • In the current case, Yellen said that Russia has long presented itself as a reliable energy partner, but in the Ukraine war, Putin has weaponized the gas “against the people of Europe”.
    • Another country Yellen mentioned in her speech was China.
    • She said it currently controls over 80 per cent of global solar panel production.
    • However, there are reports that in parts of the country, like Xinjiang, the production of panels takes place through forced labour.

    Issues with friendshoring

    • Friendshoring may push the world towards a more isolated place for trade and reverse the gains of globalisation.
    • It is a part of the “deglobalisation” process.
    • While moving supply chains away from East Asia could increase security in the long run, an ill-conceived implementation of this friendshoring strategy could result in price hikes and a stronger China over time.

     

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  • Principles of Financial Consumer Protection

    Consumer Protection

    Context

    • Earlier this year, the G20/OECD released a draft of the proposed revisions to their 2011 High-level Principles on Financial Consumer Protection. As India takes over G20 presidency in December, it must lead others by example and adopt the revised principles, especially since the global financial markets are headed for a stormy future.

    What is Financial Consumer Protection (FCP)?

    • Financial consumer protection encompasses the laws, regulations, and institutional arrangements that safeguard consumers in the financial marketplace. It includes technical guidance, country reports, and tools for policymakers, regulators, development partners and other experts.

    Background of Financial Consumer Protection

    • 10 thematic areas: The 2011 principles covered 10 thematic areas reflecting the market and consumer issues, including equitable and fair consumer treatment, disclosures and transparency, and financial education.
    • Two additional principles included: In October, the fourth finance ministers and central bank governors meeting endorsed these principles. In 2022, two additional principles were included access and inclusion and quality financial products.
    • Recommendation for intervention: The updated principles also recommend intervention by regulators in certain high-risk products, cultivating appropriate firm culture and using behavioral insights to better consumer outcomes.
    • These principles deal with three cross-cutting themes
    1. Financial well-being,
    2. Digitalization and
    3. Sustainable finance.

    Financial well-being under Financial Consumer Protection

    • Individual financial well-being: OECD’s working definition of “individual financial well-being” refers to being in control, feeling secure and having freedom about one’s own current and future finances.
    • Easy disclosure to consumers: An effective FCP regime must ensure adequate and easy to understand disclosures to consumers. However, an information dump for mere compliance defeats this purpose, especially in India where financial literacy is not pervasive.
    • Risk profiling by service provider: Regulators such as SEBI prescribe certain financial service providers to assess customer suitability and undertake risk profiling before providing services.
    • India does not recognize this theme: At present, India does not recognise this concept. Going forward, faced with challenges like financial illiteracy and economic hardship, it may be worth considering.

    Consumer Protection

    Digitization under FCP

    • Increasing digital channels in financial domain: FCP must factor in the increasing number of digital channels consumers use to interact with financial products and services and the impact of greater use of artificial intelligence and other emerging technologies.
    • Guideline on digital lending by RBI: In September, the RBI released guidelines on digital lending, mandating entities providing digital lending services to have a grievance redress officer, assess a borrower’s creditworthiness before extending credit, and allow a borrower to exit without penalty.
    • Poor grievance redressal: Additionally, there are concerns regarding redress of grievances against payment service providers in the UPI ecosystem. With the rising number of UPI transactions and the largely unregulated status of cryptocurrencies, FCP will continue to be relevant.

    Sustainable finance under FCP

    • Multi-dimensional approach: There is growing consumer demand for sustainable financial investments. Financial services providers are incorporating environmental, social and governance factors into their operations, products and services.
    • Transparency is must: FCP recommends improved transparency to help consumers make informed choices.
    • BRSR by SEBI: SEBI has transitioned from “business responsibility reporting” to “business responsibility and sustainability reporting” (BRSR) to promote responsible corporate governance vis-à-vis climate change.
    • Mandatory disclosure by BRSR: Eligible companies under BRSR must provide certain disclosures, including a sustainability performance report. This allows investors to make an informed decision. Similar disclosures must be introduced in other market segments.

    Consumer Protection

    Conclusion

    • The RBI’s financial inclusion index shows that an increasing number of people are entering financial markets. FCP is central to ensuring that they continue to stay. The current regulatory landscape is sectoral and fragmented, resulting in regulatory arbitrage, as witnessed in the case of digital gold. Regulators must take a coordinated approach to protect consumers.
  • Addressing the Leakages in PDS in the light of PMGKAY

    PMGKAY

    Context

    • The government of India extended Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), a scheme to distribute free food grains to the poor, for another three months. However, issues of food grain leakages remains unaddressed.

    Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY)

    • PM-GKAY: Launched during COVID-19 crisis to provided food security to the poor, needy and the vulnerable households/beneficiaries so that they do not suffer on account of non-availability of adequate foodgrains. Under PMGKAY, effectively it has doubled the quantity of monthly foodgrains entitlements being normally delivered to beneficiaries.
    • Benefits: Under PMGKAY welfare scheme, 5 kg of food grain per person per month is provided free of cost for all the beneficiaries covered under the National Food Security Act (NFSA) including those covered under Direct Benefit Transfer (DBT).
    • Financial Expenditure: Financial implication for the Government of India has been about 3.45 Lakh Crore for Phase-VI of PMGKAY. With the additional expenditure of about Rs. 44,762 Crore for Phase-VII of this scheme, the overall expenditure of PMGKAY will be about Rs. 3.91 lakh crore for all the phases.
    • Grain Allotment: The total outgo in terms of food grains for PMGKAY Phase VII is likely to be about 122 LMT. Food grain for phases I- VII is about 1121 LMT.
    • Implementation: PM Garib Kalyan Ann Yojana (PMGKAY) has been implemented in the following phases –
    1. Phase I and II (8 months): April’20 to Nov.’20
    2. Phase-III to V (11 months): May’21 to March’22
    3. Phase-VI (6 months): April’22 to Sept.’22

    PMGKAY

    Impact of the PMGKY scheme

    • Ensuring food security and public health: Policymakers and experts concede that the scheme made a difference to food security and public health during the pandemic.
    • IMF commended the scheme: Be it the Parliamentary Standing Committee on Food and Public Distribution or the authors of an IMF-published working paper, “Pandemic, Poverty, and Inequality: Evidence from India” (April 2022), the scheme has received commendation.
    • Absorbing the shock in the pandemic: The working paper concluded that “the social safety net provided by the expansion of India’s food subsidy program absorbed a major part of the pandemic shock.”

    Why the experts are suggesting the study of PMGKY?

    • Rationalizing the budget: To keep the budgetary allocation under control, rules on quota for rice or wheat can be changed suitably.
    • Checking the diversion of Funds: While it is all right to provide foodgrains free during the pandemic, the central and State authorities need to ponder over the scheme’s continuance, given the chronic problem of diversion from the Public Distribution System (PDS).
    • Combing the Centre and state subsidy: In many States, including West Bengal, Kerala and Karnataka, the 50 kg is free. In Tamil Nadu, for over 10 years, rice-drawing card holders have been getting rice free.

    PMGKAY

    How the transparent study of PMGKY will help in leakage detection?

    • Updating the database of beneficiary: Study should be the basis for updating the database of foodgrain-drawing card holders, scrutinising the data critically and zeroing in on the needy.
    • Automation of PDS: The task should not be onerous, given the widespread application of technological tools in the PDS such as Aadhaar, automation of fair price shops and capturing of the biometric data of beneficiaries.
    • Estimation of PHH: Using this database, the Centre and States can decide whether the size of the Priority Households (PHH) nearly 71 crores, can be pruned or not.
    • Reasonable price to avoid freebies culture: In addition, if they feel the need to go beyond the mandate of the NFSA, as is being done under the PMGKAY, they can supply the foodgrains at a reasonable price. The culture of providing essential commodities free of cost at the drop of a hat has to go.

    Conclusion

    • PMGKY has helped the needy in people in the dark period of pandemic. However, with good intention of government food grain leakages of PDS couldn’t be stopped. Transparent study of will certainly help in leakage detection and more targeted delivery.

    Mains Question

    Q. Schemes of food security are always with good intentions; However, lack of transparency and leakages disturbs targeted delivery. Discuss the measures to ensure the last mile delivery of food grains.

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  • National Investment and Infrastructure Fund (NIIF)

    Finance Minister has urged the National Investment and Infrastructure Fund (NIIF) to expand its operations and explore ways to crowd in private capital for projects under the National Infrastructure Pipeline, PM Gati Shakti and National Infrastructure Corridor.

    What is NIIF?

    • National Investment and Infrastructure Fund (NIIF) is India’s first infrastructure specific investment fund or a sovereign wealth fund that was set up in February 2015.
    • The objective behind creating this fund was to maximize economic impact mainly through infrastructure investment in commercially viable projects, both Greenfield and Brownfield.
    • It was proposed to be established as an Alternative Investment Fund to provide long tenor capital for infrastructure projects with an inflow of ₹20,000 crore from the GoI.
    • It was registered with SEBI as Category II Alternative Investment Fund.

    Types of funds in NIIF

    • NIIF manages three funds: Master Fund, Fund of Funds and Strategic Fund.
    • The funds were set up to make investments in India by raising capital from domestic and international institutional investors.
    1. Master Fund: It is an infrastructure fund with the objective of primarily investing in operating assets in the core infrastructure sectors such as roads, ports, airports, power etc.
    2. Fund of Funds: The Fund of Funds anchor and/or invest in funds managed by fund managers who have good track records in infrastructure and associated sectors in India. Some of the sectors of focus include Green Infrastructure, Mid-Income & Affordable Housing, Infrastructure services and allied sectors.
    3. Strategic Opportunities Fund: It is registered as an Alternative Investment Fund II under SEBI in India. Its objective is to invest largely in equity and equity-linked instruments. It has been established to provide long-term capital to strategic and growth oriented sectors in the country with the aim to build domestic leaders.

    Functions of NIIF

    The functions of NIIF are as follows:

    1. Fund raising through suitable instruments including off-shore credit enhanced bonds, and attracting anchor investors to participate as partners in NIIF;
    2. Servicing of the investors of NIIF.
    3. Considering and approving candidate companies/institutions/ projects (including state entities) for investments and periodic monitoring of investments.
    4. Investing in the corpus created by Asset Management Companies (AMCs) for investing in private equity.
    5. Preparing a shelf of infrastructure projects and providing advisory service

     

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