Thursday 24 April 2014
News updated at 7:07 PM IST
Weather
Max: 34.6°C
Min : 22.8°C
In Bangalore
Generally cloudy

Don't use FE for $20 b wealth fund, says RBI

New Delhi, Oct 13, PTI:

Centre has been asked to create the required corpus from the budget

The Reserve Bank of India (RBI) has opposed the creation of a US$20 billion sovereign wealth fund, for acquisition of energy assets overseas, out of foreign exchange reserves and wants the government to create the corpus for it from the budget.

Montek Singh AhluwaliaA Group of Ministers headed by Finance Minister Pranab Mukherjee today deliberated on the possible ways of creating a fund on the lines of ones that exit in countries like China.

“Various things were discussed but no view has emerged,” Oil Minister S Jaipal Reddy said after the 75 minute meeting.

Sources privy to the deliberations said RBI was against using nation's forex reserves for setting up the fund. So, the Planning Commission has been asked to work out surplus that may be generated after accounting for all Plan and non-Plan expenditure.


“What they are talking is US$1-2 billion corpus which is hardly the size...for acquisitions of oil and gas fields or coal and other mineral mines,” a source said. “We decided we will take a look at it after the (12th Five Year) Plan approach paper is approved,” Planning Commission Deputy Chairman Montek Singh Ahluwalia.

Asked if RBI agreed for sharing a part of the over US$300 billion forex reserves, he said:

“Those are some of the issues. I mean one view is that it could be done through use of forex reserve. There are some operational problems there. The other view is that if you do it out of budgetary resources.”

He added “obviously if you use budgetary resources then you are taking from other use of plan fund. That's what we have to look at.”

Reddy said PSU oil firms can compete for overseas energy assets if their finances are protected. State fuel retailers are projected to lose Rs 1,22,000 crore this fiscal on selling diesel, domestic LPG and kerosene at rates below cost.

“We need to get our companies strengthened through proper pricing policy,” he said. India has been outpaced by China in the quest to acquire oil blocks and coal fields. Chinese firms have announced about US$46.6 billion worth of energy acquisitions overseas since January 2010, compared with US$8.3 billion by Indians.

The oil ministry wants the government to start a fund using part of the reserves. The fund was proposed to help state-run companies compete with their overseas counterparts for energy assets abroad.

“Everybody can create fund for US$10 billion. That’s not a problem. How big a fund is  depends on what resources you want to put into it,” he said.

Go to Top

Photo Gallery
A worker spreads paddy crop for drying at a rice processing unit in Bavla...

A worker spreads paddy crop for drying at a rice processing unit in Bavla...

A helicopter flies past as Bangladesh's naval frigate BNS Abu Bakar participates in multi-country...

A helicopter flies past as Bangladesh's naval frigate BNS Abu Bakar participates in multi-country...

Sachin Tendulkar poses for a photograph with his wife Anjali during his 41st bithday celebrations...

Sachin Tendulkar poses for a photograph with his wife Anjali during his 41st bithday celebrations...

Prime Minister Manmohan Singh showing the ink mark on his finger after casting vote for Lok Sabha...

Prime Minister Manmohan Singh showing the ink mark on his finger after casting vote for Lok Sabha...

Residents trying to salvage their belongings after a massive fire gutted their houses in Patna...

Residents trying to salvage their belongings after a massive fire gutted their houses in Patna...

A honeybee ‘caught’ by a ‘len’s eye’ while feeding on nectar...

A honeybee ‘caught’ by a ‘len’s eye’ while feeding on nectar...

Labourers thrash cornflower stalks in a field during morning hours near Vrindavan...

Labourers thrash cornflower stalks in a field during morning hours near Vrindavan...

Chief Minister of Manipur O Ibobi Singh offers floral tribute at Khomjam War Memorial Complex...

Chief Minister of Manipur O Ibobi Singh offers floral tribute at Khomjam War Memorial Complex...

In this Sunday, March 2, 2014 file photo, Olivia Wilde, and Jason Sudeikis arrive at the ...

In this Sunday, March 2, 2014 file photo, Olivia Wilde, and Jason Sudeikis arrive at the ...

Britain's Prince William and his wife Catherine, Duchess of Cambridge, attend a reception ...

Britain's Prince William and his wife Catherine, Duchess of Cambridge, attend a reception ...

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bangalore - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523