The government has decided to have two separate funds under the National Infrastructure Investment Fund – a clean energy fund and a road fund, Economic Affairs Secretary Shaktikanta Das told reporters on Thursday. He also indicated that funding activities will start in a few days.
“…there will be two separate funds--clean energy fund which will primarily focus on renewable energy, and there will be another fund which is road funds which will take up road projects,” he said.
Noting that there were certain challenges with regard to NIIF, Das said investors were more interested in investing in specific, dedicated, sectoral fund rather than all-purpose, multi-sector umbrella fund. Subsequently, the government had to restructure and recast the structure and begin with two sectorally dedicated funds.
NIIF was created by the government to enhance infrastructure financing in the country, and The government will contribute Rs 20,000 crore to the fund, and another Rs 20,000 crore is to be raised from sovereign funds.
The government has signed a memorandum of understanding with two to three sovereign funds, and NIIF will start its operations in a few days, Das said. “…There is a lot of investor appetite. It’s just a matter of weeks or one or two months at best, of activities taking place. The bigger investment interest is in the dedicated funds,” he said.
The investor investing in the dedicated funds will also have a stake in the larger fund, Das added.
Finance Minister Arun Jaitley also pointed out on Thursday that the NIIF will start funding activities in the next few days, adding that the NIIF model is in the process of evolving, and has to be perfected.
“I think our model is in the process of evolving and therefore with a large amount of infrastructure needs, which can really be the key to Indian investment and economic activities over the next several years, which can keep growth rate at a high level. This model has to be perfected,” Jaitley said.