National Investment and Infrastructure Fund (NIIF):
- NIIF was established as a trust that will have a corpus of Rs 20,000 crore.
- It was created as an investment vehicle for funding commercially viable greenfield, brownfield and stalled projects.
- The government’s contribution would be limited to 49% of the subscribed capital
- The government will seek participation from strategic investors such as sovereign fund, quasi sovereign funds and multilateral or bilateral investors, which can help leverage this fund to many times
- NIIF is set up as a Fund of Funds (Category II Alternate Investment Fund) with a proposed series of funds.
- Cash-rich PSUs, pension funds, provident funds, National Small Saving Fund will be able to pick up stake in the fund
Main function of NIIF are :
- NIIF is supposed to raise debt to invest in equity of infrastructure finance companies such as NHB and IRFC( Indian Rail finance corporation) . This will help these companies to raise capital which can subsequently be used for boosting the projects.
- The Fund aims to attract investment from both domestic and international sources
- Acting as an advisor for the Infrastructure project companies.
- Invest in the corpus created by Asset Management companies.
- Helping other important sectors such as Manufacturing and Banking so that sentiments can be boosted for investment in infra related projects.
Problems being faced by NIIF :
- Not much investment have come so far from the private players.
- The Sentiments of the investors have been mixed with some sector such as vehicle and cement production rising whereas some sectors such as railway freight falling depending on the interest of investors.
Actions being taken by Govt.:
- The alteration in the model is being made to allow the investors to invest in the individual projects instead of investing in the fund.
- This will give free choice to investors who can invest according to their personal choice.
Recent changes in structure of NIIF:
- The fund will now have two dedicated funds — one for roads and another for clean energy.
- This is aimed at getting long-term funds into these two crucial sectors of the economy.
- This will also reduce pressure on banks, which are the primary source of finance for long-term infrastructure projects.