Context:
The investments of Sovereign Wealth Funds in India have seen a steady rise over the past few years.
About Sovereign Wealth Fund:
- It is a state-owned investment fund comprised of money generated by the government.
- Mostly derived from a country’s surplus reserves.
- Main objective – To allocate funds for the betterment of the country’s economy.
- Investments – It is used to invest in capital assets (such as real estate, metals, stocks, and bonds), private equity funds and hedge funds.
- Sources –
- Balance of payments surpluses
- Official foreign currency operations
- The proceeds of privatizations
- Governmental transfer payments
- Fiscal surpluses
- Receipts resulting from resource exports
National Infrastructure and Investment Fund (NIIF):
- India’s 1st ever SWF (infrastructure specific investment fund)
- Objective – To maximize economic impact mainly through infrastructure investment in commercially viable projects, both Greenfield and Brownfield.
- Set up in December 2015 as a Category-II Alternate Investment Fund.
- Manages 3 funds –
- Master Fund: Invests in core infrastructure sectors such as roads, ports, airports, power etc.
- Fund of Funds: Invests in Green Infrastructure, Mid-Income & Affordable Housing, Infrastructure services and allied sectors.
- Strategic Fund: Invests largely in equity and equity-linked instruments.
- NIIF is considered India’s quasi-sovereign wealth fund. Why? – As Indian government has a 49% stake in NIIF with the rest held by foreign and domestic investors.
Greenfield (New project): 100% foreign investment is allowed under automatic route.
Brownfield (Existing project): FDI upto 74% are allowed under the automatic route and Government approval is required for investment beyond 74%.
Source: The Hindu
Previous Year Question
With reference to ‘National Investment and Infrastructure Fund’, which of the following statements is/are correct?
1. It is an organ of NITI Aayog.
2. It has a corpus of ₹4,00,000 crore at present.
Select the correct answer using the code given below:
[UPSC Civil Services Exam – 2017 Prelims]
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (d)
