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The finance ministry said it expects investment to the tune of USD 13 billion (about Rs 85,000 crore) in infrastructure through the National Investment and Infrastructure Fund (NIIF).

 

According to Economic Affairs Secretary S C Garg who said at an event that, they have established NIIF which  is their first experience in trying to use the sovereign wealth. The government put out USD 3 billion in NIIF would raise the equal or higher amount from other participants, sovereign wealth funds, pension funds, other private sector participants to raise a corpus of about USD 7-8 billion, and then the co-investment will also come in. The expectation about USD 12-13 billion in investments in infrastructure mobilized through NIIF

He added that government is also thinking of more such innovative instruments to fund iconic, national level infrastructure and further said, the other thing taking shape now is to monetize the mature assets built through public money and utilize the proceed for newer projects.

According to him lot of public assets which are yielding regular kind of return, it is possible to free up invested resources thereby converting them using the InVit (Infrastructure Investment Trust) model...so matured assets can be transferred to trusts.

Citing example of Air India, he said, the government is in the process of selling its stake in the government-owned airline to private sector.

Emphasizing that there is a huge fund requirement for infrastructure development, Garg said, the investment coming from the public sector is now over 3 per cent but the need is far more.

Therefore, they are looking for newer means for financing infrastructure. He further said, adding big money lies with a lot of pension funds. So, they get them interested to invest, and therefore they are looking at a number of ways, policy on permitting FPIs, policy on AIF (Alternative Investment Funds. In short, in financing, these are the major issues and developments, he said.

To meet the funding requirement, infrastructure trusts, debt funds are being set up, he said, adding that small issues in Real Estate Investment Trusts (ReITs) will be sorted out soon to make it major financial instrument.

He also said that banks funded infrastructure in a big way between 2008 and 2013 though many investments, which turned out to be less than robust and resulted in accumulation of huge non-performing assets.