The Centre has approved the setting up of a national infrastructure fund with an initial corpus of Rs.20,000 crore. The move is seen as a catalyst to spur infrastructure investments. The fund will be managed by a company called National Infrastructure Investment Company Ltd (NIIC) that will finance projects that find it difficult to get funding from traditional channels. To be organised as a trust, the fund will also lend to projects that are viable but stuck for lack of funds. The fund’s corpus will correspond to the equity capital of NIIC.
Though the initial focus of the fund will be road projects, it will also support government-owned financial institutions like Indian Railway Finance Corporation and National Housing Bank, for onward lending. The National Infrastructure Investment Company Ltd will have 49 per cent stake held by various government-owned companies while the rest will be held jointly by multilateral lending agencies, pension funds and infrastructure specialists.
NIIC will also be allowed to leverage its equity base to raise more funds through debt, both locally and overseas. As the company will have backing of the government, it will be able to raise funds at attractive rates, it is learnt.
