The Industry Ministry on Friday pitched for setting up of Sovereign Wealth Fund for infrastructure financing, which requires an estimated Rs.45 lakh crore ($1 trillion) in the next five years.
In a discussion paper on infrastructure financing, the Ministry said the government should use part of its foreign exchange reserves to set up the Sovereign Wealth Fund (SWF) as had been done by countries such as China, Korea and Singapore.
“While the Reserve Bank of India has reservations about the issue, this (SWF) option needs to be explored,” it said.
India has foreign exchange reserves of about $318 billion.
Besides setting up SWF, the Ministry has made a case for development of the domestic bond market, the currency market and debt funds for financing infrastructure projects, seen as a major bottleneck in achieving double-digit economic growth.
The concept paper also suggested that the government should address the taxation issues concerning infrastructure bonds as they would not be eligible for tax exemptions under the Direct Taxes Code (DTC), which is likely to come in force next fiscal.
