Sone Ki Chidiya 2.0: An INR 77 Trillion World’s First Public Listed 'Sovereign Wealth Fund Of India'​ (SWFI)

Happy Vijayadashmi :)

Current Problem
India’s Central & 29 State Government financials is under immense pressure due to fall in GDP due to covid. Infact the finances have not been adequate for the government in pre-covid scenario too. As a sample, I studied central government & few state government financials. These are my key observations:-

1. Interest cost on existing debt is around 33% of Gross Receipt for the FY 2018-19 and with fall in tax revenue, higher budget deficit & additional loan this year due to covid, total interest cost is going to be higher. In other words, vicious cycle leapfrog.
2. Pension related expenses, grant to state governments & other social importance matters lead to allocation of another 33% of Gross Receipt in the FY 2018-19.
3. With 2/3rd almost gone, government is left with very few receipts to invest in strategic importance sector like – Infrastructure, defense, agriculture, healthcare, education etc.

Need of the hour

Government need to shift its finances from vicious to virtuous cycle and eventually move to budget surplus, repay all its existing loans and make state government self-reliant & responsible.

Solution

New financial instrument: World’s first public listed Sovereign Wealth Fund of India (SWFI) – 'Sone Ki Chidiya' to raise INR 77 Trillion.

Sovereign Wealth fund has existed for more than a century and has been gaining massive importance since 2000. Mostly countries rich in natural resources like Oil have budgetary surpluses. SWF has been the best structure to park surplus money and make investment naturally & globally in a variety of real and financial asset classes such as stocks, bonds, real estate, precious metals, and alternative investments such as private equity fund or hedge funds. Currently, China, Norway, UAE, Kuwait, Saudi & Russia lead the way in privately owned Sovereign Wealth Fund. India can lead way in public listed Sovereign Wealth Fund.

Why India for world 1st public listed Sovereign Wealth Fund
India’s has rich culture of largest democracy, young population, entrepreneurship, innovation, open market for global companies to tap India & global market. India is best placed to lead world growth in post-covid era.

It is best placed to tap and launch world’s 1st public listed SWF on domestic stock exchange. This can be achieved in two ways or mix of both:-

1. Listing SWF backed by underlying assets; and/or
2. Listing SWF as Special-purpose Acquisition Company (SPAC);
3. Mix of both

I shall cover both the routes in more detail in my next article. Also, I’ll also touch on how INR 77 Trillion domestic & international capital will line up to subscribe to this instrument in my next article. For now, I invite you to contemplate on it and share your thoughts, feedback & suggestions.

Investment/Deployment of INR 77 Lacs Crores under PPP model (a sample):-

1. 11 Lacs Crores for 500 Airports. 500 Smart Cities. 5000 Smart Villages under PPP model.
2. 11 Lacs Crores for Infrastructure: Rail (plus Bullet & Metro), Road, Water, Sea & Air under PPP model.
3. 11 Lacs Crores for startups, innovation, science, technology & space sector under Funds of Fund model.
4. 11 Lacs Crores for manufacturing, IoT, Defense, Agro food processing under PPP model.
5. 11 Lacs Crores for Agriculture, Healthcare & Education Industry under PPP model
6. 11 Lacs Crores for natural resources industry like mining, telecom etc. under PPP model
7. 11 Lacs Crores for investment in International Corporations which is financially viable & of strategic importance to India.

Future Road Map
Once central government implements it, all 29 state governments & 500+ municipal corporations will follow suit to list sovereign wealth funds. Let’s pledge to come out of economic loss due to covid with a bang.

Benefit

1. India's Supply side infra will expand.
2. Domestic equity capital to infuse growth for India growth to $ 20 Trillion economy over next 20 years.
3. Massive wealth, job, innovation creation for India's mass population
4. The era of high economic growth for India & World
5. India at par with China in Sovereign Wealth Fund category
6. Equitable growth of all parts of India -Metro city, Tier 1/2/3 cities & villages
7. Efficient supply chain due to a robust transportation
8. Ultimately India will reclaim its golden era of Sone Ki Chidiya & be a Vishwaguru again to guide world of new way of growth.

I look forward to hearing your suggestions & feedback in the comment section.