The government today announced that it will provide Rs 100 crore as seed money for setting up the India Inclusive Innovation Fund to promote new ideas.

"With permission of Prime Minister, I propose to make an initial contribution of Rs 100 crore to kickstart the India Inclusive Innovation Fund (IIIF)...I expect that IIIF will be a global leader in pioneering low cost innovation," Finance Minister Pranab Mukherjee said here while releasing the first report of National Innovation Council.

The NInC, a body to promote new ideas for inclusive development was set up last year in August by the government.

Mukherjee said, however, that the creation of the fund alone would not address the problems of a large section of society.

"Venture capital does not cater to solving the problems of bottom of the population. Our government is committed to give them their due opportunity," Mukherjee said.

Eventually NInC will create IIIF with corpus of Rs 5,000 crore in phases. The corpus will be used to back enterprises developing innovative solution for customers who lie in the 'bottom 500 million' in Indian society.

However, IIIF will operate as a 'for-profit' entity with a focus on social investment. NInC is likely to start operating the fund after accumulating Rs 500 crore in kitty.

"We do not want government to be probably more than 20 per cent of the fund because we don't want it to be government fund. It will be private venture captial fund," NInC Chairman Sam Pitroda told reporters.

"We have started talking to various other source of funds. We will raise another Rs 700 to 800 crore and make it up to Rs 1,000 crore. That is good enough to start," he said, adding that the amount of Rs 5,000 crore will be raised in phases.

"We have not fixed any timeline for this (Rs 5,000 crore). Government has given Rs 100 crore, we expect to rasie rest of 80 per cent (Rs 400 crore) in next 12 months and start once we have Rs 500 crore in it," NInC member Saurabh Srivastava said.