India has dropped plans to set up a $5-billion sovereign wealth fund as there are several avenues available with companies to fund their overseas acquisitions, minister of state for finance Namo Narain Meena told Parliament on Friday.
?In the past, the government had examined a proposal to create a sovereign fund of $5 billion for financing acquisitions of companies abroad. However, it was decided not to pursue this proposal,? Meena said.
?It was felt at that time that a number of avenues for funding of acquisition abroad were available and that money was not a primary constraint for Indian companies to acquire assets or companies abroad,? he said.
India?s foreign exchange reserve was in excess of $280 billion till July end, but the country prefers to invest in safe yet low-interest yielding US treasury bills, IMF?s special drawing rights and gold rather than spending in equities. Also, India wants to keep a cushion so that foreign exchange does not become an issue in times of external shocks in global crude price spikes.
