India can follow the path of Gulf economies and countries like China in terms of foreign investment. The Government of India is considering a plan to create a sovereign wealth fund. It is being claimed in the news that the government has already started talks for this.
Discussions held with Reserve Bank and SEBI
According to a report by CNBC TV18, the Government of India plans to create a sovereign wealth fund. For that, the government has already held initial talks with the Reserve Bank, market regulator SEBI and GIFT City. The focus of the talks was on how practical it could be to create a sovereign wealth fund for India.
Opinions sought from government companies
The report quoted sources as saying that the government has also sought opinions from more than 30 government companies regarding the sovereign wealth fund. All those government companies have been asked what is their opinion on sovereign wealth fund and whether the strategy of sovereign wealth fund will be successful in India. The government feels that by creating sovereign wealth fund, opportunities can open up for India to invest billions of dollars abroad.
Government’s intention behind creating sovereign fund
The government plans to create India’s own sovereign wealth fund and through it invest in other countries on PPP mode (Public Private Partnership). Government officials believe that such fund will increase India’s ability to invest in infrastructure projects abroad. The government wants to know how much help can be given to friendly countries by creating such fund.
What is sovereign wealth fund?
Sovereign wealth fund is actually a government investment fund. Generally, money of the concerned government is invested in such fund. Many countries have such funds in which the governments of the respective countries invest funds from surplus revenue. These funds invest in projects of other countries. On one hand, this gives the government an opportunity to earn by taking advantage of investment opportunities in other countries. Along with this, such funds also prove to be a helpful tool in diplomacy for the concerned country.
India can benefit in this way
This scheme of the government is being linked to India’s growing global ambitions. Through the Sovereign Wealth Fund, India can strengthen its presence in other countries of the world. It can also be linked to the country’s rapidly growing economic strength. Such a fund can help the Indian government not only in economic terms but also in terms of diplomacy.
These are the world’s largest sovereign funds
According to Investopedia, in the year 2024, the world’s 100 largest sovereign wealth funds will have assets worth about $13 trillion. At the top of them is Norway’s Government Pension Fund, which has assets worth $1.6 trillion. The total wealth of China’s sovereign fund is $1.35 trillion. The sovereign funds of Gulf countries like Abu Dhabi, Saudi Arabia and Kuwait also have assets worth about $1 trillion each.
These companies may get a chance
According to initial talks, the Indian government feels that if a sovereign wealth fund of $5 billion is created, it can provide investment opportunities of $10 billion annually. Right now the government plans to open the Sovereign Wealth Fund only for government companies. Later, the Sovereign Wealth Fund can be opened for other institutions and listed companies.
