Government on Friday said it was considering creation of a sovereign wealth fund for financing company acquisitions abroad, but later dropped the proposal as it felt that Indian firms had enough money for foreign takeovers.
"...It was decided not to pursue this proposal (of setting up a sovereign wealth fund). It was felt at that time that a number of avenues for funding of acquisition abroad were available and that money was not a constraint for Indian companies to acquire assets/companies abroad," Minister of State for Finance Namo Narain Meena told the Lok Sabha.
The sovereign wealth fund (SWF) was proposed to be set up with a corpus of USD 5 billion, he said in a written reply.
Meena, however, said that consideration for creation of such fund was an ongoing process that depended on different circumstances, including the evolving nature of the financial systems in India and in the world.
The SWF, which would have been the first of its kind in India, was meant to be a state-owned investment fund comprising of financial assets such as stocks, bonds, property, precious metals or other financial instruments.
The US Treasury defines SWFs as government investment funds, funded by foreign currency reserves but managed separately from official currency reserves. The funds are deployed overseas for higher returns.
At present, there are over 50 SWFs worldwide, managing about USD 3-trillion worth of assets.