India's sovereign wealth fund has half a million dollars

The Indian government has contributed Rs 4 cr till date out of an envisaged corpus of Rs 40,000 cr

During his tour of India as the chief guest at the republic day celebrations, one of the things on top of UAE’s crown prince Mohammed bin Zayed Al Nahyan's agenda was investing in India’s sovereign wealth fund established in 2015. However, the pact envisaging a $75 billion investment by UAE’s sovereign fund in India’s fund could not be signed. Called the Abu Dhabi Investment Authority, UAE’s sovereign fund is the world’s third largest sovereign fund with close to $800 billion in assets across the world.

While the reasons for the pact not being signed remain unclear, it has now emerged that the National Investment and Infrastructure Fund (NIIF), India’s sovereign fund, has received Rs 4 crore (or less than half a million dollars) from the government till date since incorporation in 2015. The money was paid by the Ministry of Finance as “application money” on November 17, 2016. This was the first ever contribution to NIIF, more than a year after its incorporation in October 2015.

NIIF, India’s first ever sovereign fund, was a brainchild of the Modi administration envisaged with a corpus of Rs 40,000 crore. Half of this corpus was to come from other investors, including global sovereign funds. The fund was established to manage and administer a wide range of funds globally, including venture capital, real estate, alternative investment funds (AIFs), offshore funds, investment trusts, infrastructure debt funds and many more. NIIF was to operate under the provisions of SEBI (Alternative Investment Fund) Regulations, 2012.

The NIIF has a relatively simple structure. The President of India is the largest shareholder and holds 99.97% of the shares in the fund. The President is represented by a finance ministry official. There are six other shareholders, all of whom are finance ministry officials. As of date, the President’s representative is joint secretary in the Finance Ministry. The other six bureaucrats who are the nominees of the President include Ishita Ganguly Trpathi, Chanchal Chand Sarkar, Ujjwal Kumar, Sushila Ekka, Ravinder Kumar and Sunil Mishra

The NIIF had appointed Sujoy Bose as the new CEO in June last year. The NIIF had signed MoUs with several other sovereign funds, including Qatar Investment Authority and Abu Dhabi Investment Authority. Reports also suggest an MoU has been inked with RUSNANO, one of Russia’s two sovereign funds. However, with India’s own NIIF not yet having taken off, the MoUs have failed to translate into substantial commitments as of date.

Global sovereign funds control billions of dollars worth of assets. The biggest one is Norway’s Government Pension Fund Global with assets of $850 billion. Among other big ones are China Investment Corporation with assets worth $814 billion and Kuwait Investment Authority with $592 billion in assets.

The Modi administration was also looking to attract global funds to invest in NIIF to boost infrastructure funding in the country and revive hundreds of stalled projects. “A start has been made and there is a lot of global interest in NIIF. Things will gradually pick up steam in the coming few months. Projects have been identified and operations will commence soon,” said a senior ministry official.

Finance Minister Arun Jaitley had allocated Rs 1,000 crore in this year’s Budget to NIIF. This revised estimate was lower than the Rs 4,000 crore budgetary allocation made by Jaitley last year. Officials pointed out that not much should be read in the low allocation this year as the fund would be actively raising funds from various sources and “that there was a lot of global interest in NIIF”.