The Planning Commission has proposed that India should set up a sovereign wealth fund with an initial corpus of $10 billion, mainly to invest in energy and mining assets abroad.
?Sovereign Wealth Fund is something that the finance ministry is looking at. We have suggested to start with $10 billion,? Planning Commission deputy chairman Montek Singh Ahluwalia told reporters here on the sidelines of a Ficci event.
Sovereign Wealth Fund is a government-owned corpus where money is pooled in from state resources to invest in overseas assets to meet its future needs.
The RBI has agreed to allow $5 billion to be used from forex reserve while the rest will be pooled in from reserves of rich PSUs. The proposal has been forwarded to a group of ministers, he added. Ahluwalia didn?t give a timeframe for establishing the fund or how the government would capitalise it.
The proposed fund would help India finance overseas energy assets to feed its power plants. China has acquired significant assets in foreign land through investment from its $ 400-billion fund in the recent past.
Referring to the growth scenario for the current fiscal, Ahluwalia said that growth in the second half of the year would be crucial to attain 8% economic expansion in the current financial year.
?Growth could be around 8% for this fiscal. But, in the first quarter, it is below that. So to achieve 8%, the growth has to accelerate in the second half of the year,? he said.
Talking about the monetary policy announcement slated for September 16, Ahluwalia said that the RBI has to decide whether it wants to give a pause to the policy on monetary tightening.
?I generally agree with the finance minister. Personally what the finance minister has said is an indication of what the government thinks. But, it?s the (RBI) governor?s call,? Ahluwalia added.
The central bank has raised key policy rates 11 times in the last one and a half years to rein in rising inflation.
However, recently finance minister Pranab Mukherjee said that he feels the central bank should give a pause to such a liquidity squeeze in the wake of the global economic turmoil.