All you need to know about India's first Rs 40,000 crore wealth fund
The government's stake in this fund is fixed at 49%.
Finance Minister Arun Jaitley on Wednesday discussed the operationalisation of sovereign wealth fund, National Investment and Infrastructure Fund (NIIF).
"Second meeting of the governing council of the NIIF was held under the chairmanship of Arun Jaitley to review the status of actions taken for the operationalisation of the NIIF and to provide the road map for further activities," the Finance Ministry said in a statement.
What is NIIF and when was it proposed?
Last year, Finance Minister Arun Jaitley proposed National Investment and Infrastructure Fund (NIIF) in Union Budget.
While presenting the budget, Jaitley stated that an annual flow of Rs.20,000 crore will be ensured for the NIIF. The fund was set up to enable the trust to raise debt, and in turn, invest as equity, in infrastructure finance companies such as Indian Rail Finance Corporation (IRFC) and National Housing Bank (NHB). The infrastructure finance companies can then leverage this extra equity, manifold, said a PIB release.
After the proposal during Budget, in the last week of December, the government set up Rs 40,000 crore fund to provide long-term capital for infrastructure projects. Out of Rs 40,000 crore, Rs 20,000 crore will be invested by the government and the remaining amount is expected to come from the private investors.
"With a view to maximising economic impact through infrastructure development in commercially viable projects, both greenfield and brownfield, including stalled projects, the Government has approved the creation of NIIF. The Fund aims to attract investment from both domestic and international sources," noted PIB release.
Government's role and function?
The government's stake in this fund is fixed at 49%. NIIF activities are checked by a governing council, which is headed by Jaitley. The council includes:
Secretary, Department of Economic Affairs
Secretary, Financial Services
Arundhati Bhattacharya (Current Chairman of SBI)
Hemendra Kothari (Investment Banker)
V. Mohandas Pai (former Infosys Director)
NIIF raises funds from investors and markets. The money is then invested in the same companies, institutions and infrastructure projects.
Situation till now?
As per the reports, the international pension funds and sovereign wealth funds from Singapore, Russia and the UAE have showed interest to invest under the fund.
After Prime Minister Narendra Modi's visit to Russia, on February 2, 2016, NIIF and Russia’s RUSNANO OJSC signed an MoU to set up the Russia-India High Technology Private Equity Fund for joint implementation of investments into projects in India.
Yesterday, during the meeting, Jaitley discussed the progress on the MoUs (memorandum of understanding) for investment in NIIF with several investors such as Abu Dhabi Investment Authority from UAE, open joint-stock company Rusnano from Russia and Qatar Investment Authority, Qatar.