A board of directors could be in the driver's seat at the proposed National Investment and Infrastructure Fund (NIIF), announced by Finance Minister Arun Jaitley in the Budget.
The board would take decisions on all infrastructure projects and entities in which the fund's corpus would be invested.
However, there are likely to be other parameters.
For example, NIIF will only invest in projects, infrastructure companies or special purpose vehicles which guarantee a return on investment, according to government sources. The fund is also unlikely to invest in any public-private partnership (PPP) project.
Sources said the finance ministry had prepared a draft Cabinet note on NIIF, incorporating these points. The note is being circulated among other ministries for comments and might be taken up for approval by the Cabinet in a week or two.
"The NIIF might be headed by a chairperson, who will be chosen from the board. The board itself is likely to consist of senior serving or retired bureaucrats and experts in infrastructure, project financing and policy from the private sector," a senior government official said, adding the board might comprise seven or more members. "For welfare projects, there is the budget. The NIIF will focus on infrastructure initiatives that can generate a return on its investments," the person said.
Jaitley had said in his 2015-16 Budget speech, the NIIF will be set up with a corpus of Rs 20,000 crore and the fund will be used to raise debt and, in turn, be invested as equity in infrastructure finance companies such as Indian Railway Finance Corporation and National Housing Bank. That has now been expanded to include standalone projects as well.
As reported earlier, the finance ministry is likely to tap the dividend expected from state-owned companies to the Centre for this purpose.
While Rs 15,000 crore will come from the dividend paid by cash-rich public sector undertakings (PSUs) such as Oil and Natural Gas Corporation Ltd and Coal India, Rs 5,000 crore will be infused by the Centre.
The official added, however, that the full corpus of Rs 20,000 crore per financial year might be utilised from the next year. "This year, we can make do with a corpus of about Rs 10,000 crore, and then ramp it up," he said.
NIIF is part of the Centre's plans for greater public spending in infrastructure projects to push growth, at a time when weak earnings have curtailed the private sector's ability to infuse capital in projects.
By delaying the fiscal consolidation roadmap by a year, and by targeting fiscal deficit of 3.9 per cent of a gross domestic product for 2015-16, instead of 3.6 per cent as per the previous road map, Jaitley freed up about Rs 70,000 crore for additional investment in key infrastructure sectors, primarily railway.
The idea was first mooted by Chief Economic Advisor Arvind Subramanian in his mid-year economic analysis in December during the last financial year.
"It seems imperative to consider the case for reviving public investment as one of the key engines of growth going forward, not to replace private investment but to revive and complement it," he had stated in the report.
It was taken forward in the Economic Survey and the Union Budget.