Finance Minister P Chidambaram on Tuesday said that the government has received a proposal from the Prime Minister’s Council on Trade & Industry for setting up a $5 billion sovereign wealth fund. The council consists of industry captains.
“The council has suggested that there is a need to create a sovereign fund of $5 billon to begin with for financing acquisition of companies abroad,” Chidambaram told the Rajya Sabha.He, however, did not disclose if the government was looking into the suggestion. In a recent interview to a newspaper he had said that the government was not looking at a fund at the moment.
Last week, Reserve Bank of India Governor Y V Reddy had said that India was still weighing the pros and cons of a fund. He went on to elaborate a possible mechanism for using foreign exchange reserves, estimated at $312 billion on April 11.Sovereign funds are owned by governments and are mostly formed out of large foreign exchange reserves for investments in debt and equity markets of other countries.
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