Government approves Rs. 6,000 crores infusion in NIIF platform

The Union Cabinet on November 25, 2020, approved an equity infusion by the government of Rs. 6,000 crores in NIIF- National Investment and Infrastructure Fund over the course of two years.

The Union Minister of Information and Broadcasting, Prakash Javadekar during a media briefing informed that the cabinet has taken a significant decision of capital infusion in NIIF.

The Union Minister also informed that under NIIF, two firms, NIIF Infrastructure Finance Limited (NIIF-FL) and Aseem Infrastructure Finance Limited- AIFL will be responsible for mobilizing the funds.

#Cabinet today approved ₹6000 crore of capital infusion in the National Investment and Infrastructure Fund (NIIF) for creating rapid infrastructure. NIIF will mobilise 1 lakh 10 thousand crore for infrastructure.#CabinetDecisions pic.twitter.com/QEr3SZP1LB

— Prakash Javadekar (@PrakashJavdekar) November 25, 2020

Fund mobilization through AIFL and NIIF-FL:

The Aseem Infrastructure Finance Limited will be financing under construction brown field and green field projects with less than a year of operations.

On the other hand, NIIF-FL will be responsible for financing mature operating assets by helping the infrastructure investors for replacing high-cost bank finance with cheaper financing post-commissioning.

AIFL is AA rated company while NIIF-FL is AAA-rated. According to Prakash Javadekar, the NIIF debt platform will be putting in Rs. 7,000 crores equity while through global bond bank markets Rs. 1 lakh crore will be mobilized to make Rs. 1.1 lakh crore available for the infrastructure projects in the first tranche.

Centre’s investment in NIIF:

The central government whose investment will go into the strategic opportunities fund of NIIF has allocated Rs. 2,000 crores for the current fiscal.

However, as per the statement, in view of the unprecedented financial situation as well as the availability of limited fiscal space because of the pandemic, the proposed amount can be distributed only if there are demand and readiness for debt raising.