Union Budget 2026: The country's development will gain momentum, the government is creating a separate treasury of Rs 30,000 crore

The country appears to be very serious about growth. The government has focused entirely on infrastructure. This is why the government's capex in the last budget was over ₹11 lakh crore. 

Now, the government is working on a new plan to ensure that infrastructure projects are not hampered. According to two sources, the central government is planning to make an equity investment of ₹30,000 crore in India's Sovereign Wealth Fund. 

This investment signals the government's continued focus on infrastructure, which has driven economic growth. According to these sources, who spoke on condition of anonymity, a note has been sent to the Expenditure Finance Committee (EFC) regarding capital infusion into the National Investment and Infrastructure Fund (NIIF).

Sources said that after the plan is approved by the EFC, headed by Expenditure Secretary V. Vualanam, a Cabinet note will be sent for approval and is likely to be announced in the upcoming Union Budget. 

One of the sources cited above said, “A significant portion of the large amount being raised for the NIIF will be invested in the NIIF Master Fund II, the process for which has begun.

How much money for Master Fund II?

The NIIF is in the process of raising approximately $3.5 billion for its second master fund. Infrastructure spending has become a key pillar of India's economic growth, with government investment driving GDP growth despite a slowdown in private investment over the past few years. 

The NIIF is also launching its Private Markets Fund II, targeting $1 billion, and is in discussions with the United States for a proposed bilateral fund. Neither the NIIF nor the Ministry of Finance has yet issued a statement on the matter.

When was NIIF started?

The Government of India holds a 49% stake in NIIF. It primarily focuses on investing in key infrastructure sectors. This sovereign fund manages $4.9 billion in equity capital through its four funds – the Master Fund, the Private Markets Fund, the Strategic Opportunities Fund, and the India-Japan Fund – with investments in sectors such as ports and logistics, renewable energy, roads, digital infrastructure, and manufacturing. NIIF was established in 2015 with an initial investment of ₹20,000 crore from the central government.

In 2020, the Union Cabinet approved a further ₹6,000 crore as equity investment in the NIIF debt platform, which includes Asim Infrastructure Finance Limited (AIFL) and NIIF Infrastructure Finance Limited (NIIF-IFL). 

NIIF investors include Abu Dhabi Investment Authority (ADIA), Temasek, AustralianSuper, Ontario Teachers' Pension Plan, Canada Pension Plan Investment Board (CPPIB), Asian Infrastructure Investment Bank (AIIB), Asian Development Bank (ADB), New Development Bank (NDB), and Japan Bank for International Cooperation (JBIC).

Investment of Rs 111 lakh crore

NIIF is expected to play a key role in India's infrastructure growth targets. The government's National Infra Pipeline (NIP) targets an estimated infrastructure investment of approximately ₹111 lakh crore from FY2020 to FY2025. India's capex target for FY2026 has been set at ₹11.21 lakh crore, representing approximately 3.1 percent of gross domestic product (GDP). 

Last year's budget target was $11.11 trillion, representing approximately 3.4 percent of GDP. According to the government, the effective capex for FY2026 is estimated at $15.48 trillion, compared to $13.18 trillion in the previous fiscal year.

Capex tripled in 5 years

Capex has tripled since FY2020, boosting productivity across sectors. Since Sanjeev Aggarwal, who previously oversaw energy investments in Asia for global private equity firm Actis, took over as NIIF's chief executive officer (CEO) and managing director (MD) in January last year, NIIF has achieved some significant successes, including the sale of Ayana Renewable Power Private Limited to ONGC NTPC Green Private Limited (ONGPL) for an enterprise value of $2.3 billion.

Athang Infrastructure's three road assets were sold to Cube Highways Trust for an enterprise value of $725 million. Agarwal takes over from Rajiv Dhar, who served as interim MD and CEO of NIIF following the resignation of Sujoy Bose in May 2016. Sujoy Bose was the fund's founding head. Dhar was previously NIIF's executive director and chief operating officer (COO).