By R Shyamsunder,
As India strides towards its vision of becoming a superpower, an untapped reservoir of national wealth lies dormant in our public sector. A Bharat Sovereign Wealth Fund (BSWF) or The Bharat Fund (TBF) can revolutionise the management of government equity in public sector enterprises (PSEs) and banks, unlocking an estimated `40 lakh crore ($450-500 billion) in wealth across just 80-odd listed enterprises. (This excludes the value of land reserves at historical cost, which is significant).
The BSWF’s potential impact is staggering. A modest 2% divestment could generate $10-plus billion annually, reducing the fiscal deficit from ~4.9% to ~4.6% of GDP. But the game-changer lies in its ability to attract global partnerships, potentially drawing tens, even hundreds, of billions in foreign capital over time.
At its core, the BSWF is not just about managing assets; it’s about reimagining how we view and utilise our resources. From a fragmented approach where each ministry operates in isolation to a unified, 360° strategy, we can create a paradigm shift in managing government equity stakes in PSEs and PSU banks by pooling all the above equity into a BSWF. It advocates a unified, comprehensive approach to wealth management; strategic divestment and reinvestment strategies (e.g. redefining control of PSUs from 51% to 40%); and long-term value creation through professional asset management.
Recent successes in sectors with government programmes like Make in India and Atmanirbhar Bharat have shown us what’s possible when we unleash the potential of PSEs. The fund’s vision extends beyond profit, to invest in cutting-edge sectors like electric vehicles, hydrogen energy, semiconductors, biotechnology, and artificial intelligence. This isn’t just about economic growth, but positioning India at the forefront of innovation. Critics may argue that India, still grappling with poverty, can’t afford such ambitious ventures. But the BSWF offers a solution to leverage our vast hidden reserves for economic growth and social welfare.
Central to the BSWF’s success is a governance overhaul. The proposal calls for truly independent PSE boards operating at arm’s length from ministries; market-based remuneration to attract and retain top talent at PSEs; and reduced bureaucratic oversight to foster innovation and agility.
The fund would address the competitive disadvantages faced by PSEs vis-à-vis their private sector peers. By empowering them to operate with greater autonomy within existing regulatory frameworks, the BSWF would be able to create entities that are agile, innovative, and globally competitive. The BSWF/TBF can facilitate a turnaround of chronically underperforming PSEs through joint ventures with strategic partners who should be given autonomy for implementing plans. Of the 1,830 PSE/banks under government control, around 400 are practically non-functional. Around `9 lakh crore of budgetary allocations annually are used to support PSEs.
Moreover, the BSWF could be a powerful tool to project India’s soft power. Through a dedicated foundation, it could fund advocacy, incubate ventures, and provide disaster relief, enhancing our international standing.
The establishment of the BSWF is likely to face resistance, both domestically and internationally, including from deep state actors. Change is never easy, especially when it challenges long-standing systems. But we must remember that national interest should supersede bureaucratic and political resistance.
At the current economic crossroads, the BSWF offers a pathway to manage our fiscal health, create non-debt financial resources for social-sector commitments, and propel India into a new era of economic leadership. It’s more than an economic instrument; it’s a vision that is integral to the goal of Viksit Bharat.
The time for bold action is now. We have the resources, talent, and vision. What we need is the courage to reimagine what we have been doing and adapt to what the future demands of us. The BSWF isn’t just an option, it’s an imperative for the wealth of future generations and fiscal flexibility to provide more social welfare programmes.
The author is private equity professional & former managing director-investments, Temasek Holdings, Singapore.
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