NIF (National Investment Fund)

Government had constituted the National Investment Fund (NIF) in November 2005 into which the proceeds from disinvestment of Central Public Sector Enterprises were to be channelized.

The corpus of NIF was to be of a permanent nature and NIF was to be professionally managed to provide sustainable returns to the Government, without depleting the corpus. Selected Public Sector Mutual Funds, namely UTI Asset Management Company Ltd., SBI Funds Management Private Ltd. and LIC Mutual Fund Asset Management Company Ltd. were entrusted with the management of the NIF corpus.

As per this Scheme, 75% of the annual income of the NIF was to be used for financing selected social sector schemes which promote education, health, and employment. The residual 25% of the annual income of NIF was to be used to meet the capital investment requirements of profitable and revivable PSUs.

The Government further approved inclusion of the following purposes also, to be financed from the NIF (21st February 2013).

1. Investment by Government in RRBs/IIFCL/NABARD/Exim Bank.
2. Equity infusion in various Metro projects.
3. Investment in Bhartiya Nabhikiya Vidyut Nigam Limited and Uranium Corporation of India Ltd.
4. Investment in Indian Railways towards capital expenditure.

Public Private Partnership (PPP)

Definition

PPP is a mode of providing public infrastructure and services by Government in partnership with private sector. It is a long-term arrangement between Government and private sector entity for provision of public utilities and services.

• Public Private Partnership is a long-term contract between a Public Sector Organization and a Private Sector Company.
• To build a Public infrastructure (Ports, highways etc.) or.
• To Provide a Public utility Service (electricity, gas, water, transport, health, etc.)
• In such Public Private Partnership Contract the ownership, risks and rewards are shared between them.
• Public Private Partnership can be for a Green field project e.g. building a new airport.
• For a Brownfield project e.g. Upgrading the existing airports.
• Public Private Partnership can be done by
• Forming a Joint Venture (50:50) or Special Purpose Vehicle (a separate legal entity that is formed for a well – defined, sole and narrow purpose).
• Government granting lease/permit (a legal right) to Private Company to design, develop, finance the project.

PPP mechanism is a major element of India’s infrastructure creation efforts as there is huge level of investment requirement in the sector. The twelfth plan targets to spend $1000 bn to expand infrastructure.

PPP requires private sector participation in public asset creation through money, technology, and management. For this, several models inviting their participation were launched for different projects. Some of the commonly adopted forms of PPPs include build-operate-transfer (BOT) and its variants, build-lease-transfer (BLT), design-build-operate-transfer (DBFOT), operate-maintain-transfer (OMT), etc.