The National Investment and Infrastructure Fund (NIIF) would soon start its major activities as it is expecting funding commitments from several sovereign funds, finance minister Arun Jaitley said on Thursday. The government is also proposing a number of initiatives including Public Contracts (Resolution of Disputes) Bill, guidelines for remediating PPP (public private partnership) contracts, new credit rating system and credit enhancement for infra projects to boost investment in the sector.
NIIF will play a pivotal role, especially in infrastructure financing of projects in areas of ports, highways and railways in particular, Jaitley said while addressing Best Practices in PPPs and long-term Infrastructure Financing of BRICS Countries seminar. NIIF is as an investment vehicle for funding commercially viable greenfield, brownfield and stalled projects.
“We are awaiting a lot of commitments from various sovereign funds to become either contributors to the main fund itself or to the different sector of infrastructure sector itself which will go into this particular fund (umbrella fund NIIF),” he said.
“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,” he said.
Highlighting that infrastructure is key to the growth of economy, investment from public and private sector, will be required for infrastructure financing, especially in areas of health, education, sanitation, renewable energy, highways, ports and railways among others, Jaitley said.
Noting that there were certain challenges with regard to NIIF, Economic Affairs Secretary Shaktikanta 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 namely highway sector and clean energy fund, he said.
Das said foreign investors are keen to invest in the NIIF as the government has signed MoUs with Abu Dhabi Investment Authority, Qatar Investment Authority and Rusnano OJSC of Russia. “There are 2-3 proposals and MoUs to be signed. There is a lot of investment appetite. It’s just a matter of weeks or one or two months at best activities taking place,” he said.
The government gives high priority to infrastructure and have taken a number of policy decisions like NIIF, Innovative new financial instruments such as REITS, INVITS, IDFs, the finance ministry said in a statement. The government stressed the need for BRICS member countries to share their experiences in financing and delivery of infra projects so that they can collectively move to higher quality and efficiency in the delivery of public services.
India assumed the Chairmanship of the BRICS in 2016. As part of the run up to the BRICS Summit scheduled for October, 2016, a number of events are being organised. The Seminar is a part of these events and aims at knowledge sharing among BRICS countries on best practices in PPPs.