Govt says no to sovereign wealth fund

The government today said it had examined a proposal to set up a $5-billion sovereign wealth fund for financing overseas acquisitions by companies but decided against it.

In response to a question in the Lok Sabha, Minister of State for Finance Namo Narain Meena said that it was felt at that time that a number of avenues for funding of overseas acquisitions was available and money was not the primary constraint for Indian companies.

“However, the consideration for creating a sovereign wealth fund depends on a number of circumstances including the evolving nature of the financial systems in India and in the world, and it is a dynamic and continuous process,” he said.

The idea to set up the fund was pursued when foreign currency inflows were large and the government was planning to increase its earnings.