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

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

Montek Singh Ahluwalia

A 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.

Liked the story?

  • Happy
  • Amused
  • Sad
  • Frustrated
  • Angry

Thanks for Rating !

Dear Reader,

Welcome to our new site! We would appreciate it if you could send us your feedback about our site to ​ dhfeedback@deccanherald.co.in

Thanks for your support!