Nitin Gadkari bats for creation of sovereign wealth funds to finance infra projects in India, abroad

The proposal needed approval from the finance ministry and the union cabinet, he said. (Twitter image)

Union minister for road transport, highways and MSMEs Nitin Gadkari on Monday endorsed industry suggestion that India should create one or two sovereign wealth funds to finance big-ticket infrastructure projects both within the country and in other chosen countries.

Addressing Mindmine Summit, an annual flagship event of Hero Group, Gadkari said the government was working on creating social micro-finance institutions which would only finance up to Rs 10 lakh to small entrepreneurs. The proposal needed approval from the finance ministry and the union cabinet, he said.

As per the suggestion, in the sovereign wealth funds, the government will put in an initial seed capital and then will try to attract funds from outside particularly from countries where the return on capital has been very low and even negative, essentially to create a large corpus. Funding big infrastructure projects from the sovereign wealth fund will have a multiplier effect on the economy. RBI’s foreign exchange reserve can be tapped for the initial capital, suggested Hero Motorp’s Pawan Munjal.

“We need to find out some idea with regards to the reserve fund of the RBI. How that can be done is for the finance ministry and the RBI to decide. They are the appropriate authorities for that. You are absolutely correct, I am also supporting this view, but I am not an expert as to how that can be done. There may RBI has to take a decision for that,” Gadkari said.

Munjal said such sovereign wealth funds would address the problem of sheer access of fund. “This can be a game changer. It is going to create more employment potential, we are planning for that. We are expecting more cooperation from the bank. We need to formulate a policy in cooperation with the finance ministry and the RBI,” the minister said.

Highlighting the roles of the NBFCs, he said that these micro lending institutions should try to tap overseas capital. He admitted liquidity a problem now.