This initiative aligns with global practices, as many countries (including China, Japan, Norway, the Gulf countries and the UK) have successfully managed sovereign wealth funds that invest in a wide range of international assets.
Sources said the government recently sought the views of more than 30 state-owned companies on the likelihood of success of such a fund.
Sachchidanand Shukla, chief economist at L&T Group, highlighted the long-standing nature of this proposal. According to Shukla, the concept of a sovereign wealth fund has been under consideration for about 15 to 18 years.
He noted that in 2010-2011 the former Planning Commission made a serious attempt to create a $10 billion non-commodity-related sovereign wealth fund, but the idea was eventually shelved.
Read here | Should India have a global sovereign wealth fund?
Shukla noted that the global and national landscape has changed significantly since then and advocates revisiting the idea with a focus on maximizing social, political and economic benefits, rather than concentrating solely on financial returns.
Shukla said: “So it can be tailored to enhance India’s strategic weight, its global linkages and also some long-term issues. For example, can the sovereign wealth fund really invest in things that can enhance India’s economic linkages, diversify its risks and have a clear and differentiated mandate? I think the time has come for us to really think about something like that.”
Shukla advocates for India to expand its horizons beyond regional confines. He suggests that the creation of a sovereign wealth fund could not only strengthen the country’s economic stability but also increase its strategic influence in the region.
Read here | Sovereign wealth fund can improve India’s global investment footprint, says former ambassador
In response to whether India could better support its key allies with its own sovereign wealth fund, Shukla said targeted investments in infrastructure could lead to mutually beneficial outcomes.
He stressed that such projects could enhance India’s strategic position and global presence, citing the example of the ongoing conflict between Russia and Ukraine as an opportunity for India to play a significant role on the international stage.
To watch the full interview, watch the attached video
Read also | Pros and cons of a sovereign wealth fund for India | Q&A
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