The union cabinet on November 25, 2020, approved Rs.6,000 crore capital infusion in the National Investment and Infrastructure Fund (NIIF) debt platform over the next two years to boost infrastructure creation in the country. This move is expected to help the entity to raise ` 1.10 lakh crore in debt by the year 2025 to finance infrastructure projects in the country. This was one among the key measures announced by the union finance minister, Nirmala Sitharaman, on November 12, 2020, as a part of the central government’s stimulus to the economy, under the AatmaNirbhar Bharat 3.0. Government of India’s direct investment will raise the efficiency of NBFC Infra Debt Fund and NBFC Infra Finance Company.
Of the approved ` 6,000 crore, only ` 2,000 crore would be allocated for the current fiscal year 2020-2021. However, considering the current unprecedented financial situation and availability of limited fiscal space because of the prevailing Covid-19 situation, the proposed amount may be disbursed only if there is readiness and demand for debt raising. NIIF has said that it would take all the necessary steps to use the equity investments from domestic and global pension funds and sovereign wealth funds efficiently at a quick pace.
The NIIF debt platform comprises of Aseem Infrastructure Finance Limited (AIFL) and NIIF Infrastructure Finance Limited (NIIF-IFL). NIIF-IFL is a AAA rated company while AIFL was AA rated company. The NIIF Strategic Opportunities Fund (SOF) has set up a debt platform, including an NBFC Infra Debt Fund and an NBFC Infra Finance Company. NIIF through its SOF owns a majority position in both the companies. NIIF has already invested ` 1,899 crore in the equity of the platform. The NIIF-National Infrastructure Pipeline (NIIF-NIP) platform has a loan book of ` 8,000 crore and a deal pipeline of ` 10,000 crore. AIFL and NIIF-IFL together would be raising ` 95,000 crore from the market and this would include project bonds also.
Aseem Infrastructure Finance Limited (AIFL) is expected to finance under-construction green field and brown field projects with less than a year of operations. NIIF Infrastructure Finance Limited (NIIF-IFL) would finance mature operating assets by helping infrastructure investors to replace high cost bank finance with cheaper finance post-commissioning. It is expected that over the next five years NIIF Infrastructure Debt Financing platform can potentially support the construction of infrastructure projects worth ` 1,00,000 crore.
This move will address post Covid-19 stress of infrastructure debt financing.