India is not looking to set up any sovereign wealth fund (SWF) for now, the Finance Secretary, Arvind Mayaram has said.

“We don’t think we have reached a stage where we can now commit our forex reserves to a SWF and start investing all around the world”, Mayaram said addressing FICCI’s National Executive Committee meeting here on Saturday.

Mayaram’s remarks are significant as it is the first time since a new Government assumed charge that a senior finance ministry official was commenting on the matter of sovereign wealth funds.

In the erstwhile UPA-I Government, the Prime Minister’s Council on Trade and Industry had suggested the setting up of a sovereign fund with initial corpus of $5 billion, to help fund acquisition of companies abroad; but this suggestion was not implemented.

CAD MANAGEMENT

India has been managing its current account deficit (CAD) only through capital flows, Mayaram pointed out.

“It is not the balance of trade that is resulting in management of our CAD”, he said.

He said that most of the countries that had till date set up SWF actually had a surplus on the balance of payments front.

India was not yet there (surplus BOP), Mayaram said.

“It will only be prudent for us to wait little while more before we are able to improve our exports to the extent that we would have the comfort of being able to set up a SWF”, he said.

Mayaram said that India’s own requirements of forex could change very quickly and pointed out how a sudden outflow of FII investments from India last year resulted in downfall of the rupee.

“But the situation is completely different today. We are in much stronger position (on the foreign exchange reserves and currency front) today”.

>Srivats.kr@thehindu.co.in

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