Questions & explanations
1. The National Investment and Infrastructure Fund (NIIF) is best described as a:
- (a) Commercial bank
- (b) Government-anchored fund attracting domestic and foreign institutional capital into infrastructure
- (c) Regulatory body for highways
- (d) Subsidy scheme for farmers
Answer: (b) Government-anchored fund attracting domestic and foreign institutional capital into infrastructure
NIIF is a government-anchored, professionally managed fund (fund of funds and direct investor) that attracts domestic and foreign institutional capital, including sovereign wealth and pension funds, into infrastructure.
2. Consider the following statements:
1. In the BOO (Build-Own-Operate) model, the asset is transferred to the government after the concession period.
2. The National Monetisation Pipeline involves monetising brownfield public assets to recycle capital.
Which of the statements given above is/are correct?
- (a) 1 only
- (b) 2 only
- (c) Both 1 and 2
- (d) Neither 1 nor 2
Answer: (b) 2 only
Statement 1 is incorrect: in BOO there is NO transfer; the private party owns and operates permanently. Statement 2 is correct: the National Monetisation Pipeline monetises brownfield assets to recycle capital.
3. PM Gati Shakti is best described as:
- (a) A crop insurance scheme
- (b) A digital master-plan platform for integrated multi-modal infrastructure planning
- (c) A direct cash transfer scheme
- (d) A taxation reform
Answer: (b) A digital master-plan platform for integrated multi-modal infrastructure planning
PM Gati Shakti is a digital platform that integrates ministries and transport modes for coordinated, multi-modal and time-bound infrastructure planning to cut logistics costs.
4. Infrastructure Investment Trusts (InvITs) primarily allow developers to:
- (a) Avoid all regulation
- (b) Monetise operational infrastructure assets and recycle capital
- (c) Acquire farmland
- (d) Print currency
Answer: (b) Monetise operational infrastructure assets and recycle capital
InvITs pool investor money to own operating infrastructure assets, letting developers monetise these assets and recycle capital into new projects while investors earn yields.
5. Which committee, in 2015, reviewed PPPs in India and recommended rationalising risk-sharing and an independent dispute-resolution mechanism?
- (a) Kelkar Committee
- (b) Rangarajan Committee
- (c) Bimal Jalan Committee
- (d) Narasimham Committee
Answer: (a) Kelkar Committee
The Kelkar Committee (2015) reviewed PPPs and recommended rationalising risk-sharing, an independent dispute-resolution mechanism and an Infrastructure PPP Adjudication body.
6. The BOT-Annuity model differs from BOT-Toll in that under BOT-Annuity:
- (a) The developer collects tolls from users
- (b) The government pays fixed annual payments and bears traffic risk
- (c) The asset is never transferred
- (d) No construction is required
Answer: (b) The government pays fixed annual payments and bears traffic risk
In BOT-Annuity the government pays the developer fixed annuities and bears traffic/revenue risk, unlike BOT-Toll where the developer collects tolls and bears that risk.
7. Viability Gap Funding (VGF) from the central government is typically capped at what share of project cost?
- (a) 10%
- (b) 20%
- (c) 40%
- (d) 50%
Answer: (b) 20%
Central VGF is typically up to 20% of project cost, with the sponsoring authority able to provide an additional grant, to make socially desirable PPP projects viable.
8. NaBFID, set up to support long-term infrastructure financing, is a/an:
- (a) Insurance regulator
- (b) Development finance institution
- (c) Stock exchange
- (d) Mutual fund
Answer: (b) Development finance institution
The National Bank for Financing Infrastructure and Development (NaBFID) is a development finance institution created to provide long-term finance for infrastructure.
9. In a Public-Private Partnership (PPP) for infrastructure, the public sector typically:
- (a) Bears no risk at all
- (b) Retains ownership of the asset and provides regulatory oversight
- (c) Operates the asset throughout
- (d) Provides all the financing
Answer: (b) Retains ownership of the asset and provides regulatory oversight
In a PPP the public sector usually retains asset ownership and regulatory control while the private sector brings finance and efficiency, with risks shared.
10. Consider the following statements about the Hybrid Annuity Model (HAM):
1. The government bears the traffic/toll revenue risk.
2. The private developer is responsible for operation and maintenance.
Which of the statements given above is/are correct?
- (a) 1 only
- (b) 2 only
- (c) Both 1 and 2
- (d) Neither 1 nor 2
Answer: (c) Both 1 and 2
Both are correct. In HAM the government collects tolls and bears traffic risk, while the developer handles construction and O&M and is repaid via annuities.
11. Viability Gap Funding is awarded to PPP projects that are:
- (a) Highly profitable on their own
- (b) Economically/socially desirable but financially unviable on their own
- (c) Fully government-owned and operated
- (d) Purely private with no public interest
Answer: (b) Economically/socially desirable but financially unviable on their own
VGF bridges the gap for projects that are economically and socially desirable but not financially viable on their own, awarded to the lowest-VGF bidder.
12. Under the Hybrid Annuity Model (HAM) for national highways, the government typically funds what share of project cost during construction?
- (a) 100%
- (b) 60%
- (c) 40%
- (d) 20%
Answer: (c) 40%
Under HAM, the government funds about 40% of the project cost during construction in stages, while the private developer arranges the remaining 60%.