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Infrastructure Investment Trust

Topics Covered:

Infrastructure- roadways.

Infrastructure Investment Trust

What to study?

For Prelims: Features of InvIT, about NHAI and Bharatmala.

For Mains: Need for and significance of InvIT.

Context: Cabinet authorises NHAI to set up Infrastructure Investment Trust and monetize National Highway projects.

 

About the Infrastructure Investment Trust:

National Highways Authority of India (NHAI) will set up the Infrastructure Investment Trust(s) (InvIT) as per InvIT Guidelines issued by SEBI.

Under InvIT, highway projects will be bundled to form a special purpose vehicle (SPV) to be offered to investors.

The SPV would then be traded on the stock exchanges, and returns will be linked to the InvIT’s performance in the capital market.

 

Significance and expected outcomes:

This will enable the NHAI to monetize completed national highways that have a toll collection track record of at least one year and the NHAI reserves the right to levy toll on the identified highway.

 

Why InvIT?

InvIT as an instrument provides greater flexibility to investors and is expected to create specialized O&M concessionaires, attract patient capital for around 30 years to the highways market.

 

Need:

NHAI has received a total of Rs 36,691 crore as budgetary support and has been authorised to raise Rs 75,000 crores from the market in the current financial year.
Given the magnitude of the Bharatmala, the government’s flagship highway development program, NHAI would need adequate funds to complete the projects within the prescribed timelines.

 

What is Bharatmala project?

It is the second largest highways construction project in the country since NHDP, under which almost 50,000 km of highway roads were targeted across the country. Bharatmala will look to improve connectivity particularly on economic corridors, border areas and far flung areas with an aim of quicker movement of cargo and boosting exports.

 

About NHAI:

The National Highways Authority of India was constituted by an act of Parliament, the National Highways Authority of India Act,1988. It is responsible for the development, maintenance and management of National Highways entrusted to it and for matters connected or incidental thereto. The Authority was operationalised in Feb, 1995.

 

Sources: pib.