Overview of the Proposed Fund
The Confederation of Indian Industry has suggested setting up an India Development and Strategic Fund. According to them, the IDSF should aim at contributing to the long-term growth of the economy, its financial stability, and strategic interests of the country. It would provide loans for national development in order to give a more strategic impetus to India's global economic standing.
In that scenario, the IDSF would act as a national investment vehicle to mobilize significant capital for the creation of expanded domestic production capacity. Efficient management could therefore see the IDSF rise to 1.3–2.6 trillion USD (approximately ₹115–230 lakh crore) by 2047, according to the CII. This corpus would then be comparable to the SWFs globally that support national economic priorities in most countries.
Fundraising and Capital Mobilization Plan
In the initial phase, the government can provide a small seeding capital to gain investor confidence. In due course of time, revenues generated from the sale of national assets, such as roads, ports, transmission lines, and spectrum, can be plowed into the fund.
The proposal also provides that partial stakes in identified public sector undertakings would be transferred to the IDSF. Rather than being vehicles for disinvestment alone, these assets could emerge as the means for international business expansion.
Long-Term Investment Instruments
The IDSF could issue thematic bonds both in the domestic and international markets, including:
- Infrastructure Bonds
- Green Bonds
- Diaspora Bonds
These instruments would attract a range of investors and offer stable long-term financing. The fund could also collaborate with multilateral and bilateral partners to maximize investment opportunities.
Once the fund builds enough reserves, some portion of the foreign exchange reserves of India could be deployed for strategic overseas acquisitions in sectors like energy and key minerals.
CII's Perspective on IDSF
CII Director General Chandrajit Banerjee said it is time for India to establish a permanent national financial fund for development. India is already one of the leading economies of the world, and such long-term capital creation initiatives are necessary for achieving the objective of a developed nation by 2047.
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