India is proposing to set up a sovereign wealth fund. Though the Finance Minister had ruled out such a fund, the RBI Governor's statement at an international conference confirms the setting up of Indian Sovereign Wealth Fund.

The Prime Minister's Council on Trade and Investment recently announced that the government was exploring ways to establish a Sovereign Wealth Fund (SWF) with an initial corpus of $5 bn to acquire companies abroad, especially to buy energy assets. The news acquired importance as the directive for setting up such a fund came directly from the Prime Minister. Earlier, Finance Minister P Chidambaram had ruled out any proposal of setting up an SWF.

An interesting factor is that while the Finance Minister ruled out the proposal, Reserve Bank of India Governor, Y V Reddy, speaking on `The Role of Government-owned Investment Vehicles in Global Capital Flows' in the International Capital Markets and Emerging Markets Roundtable held in Washington DC on April 14, 2008 said, "Such a fund could help the country get better returns from its swelling foreign exchange reserves." SWFs have increased their influence on global financial markets in recent years. Assets under management of SWFs have more than doubled between 2001 and 2007, and are underpinned by the growth in foreign exchange reserves due to rising trade surpluses of some countries. SWFs are likely to become more important participants in global financial markets in the coming years as inflows from trade surpluses and commodity exports continue.

Portfolio Organizer Magazine, Sovereign Wealth Fund, SWF, International Capital Markets, Global Financial Markets, Foreign Exchange Reserves, Gross Domestic Products, GDP, International Financial Services, Sub-prime Crisis, Macroeconomic Policy, Indian Economy.