Why India needs a sovereign wealth fund now
SWFs to stabilize their financial systems. The largest SWF, Norway’s Government Pension Fund-Global, was established in 1990 to preserve and grow the country’s oil revenues from the North Sea. Today, the fund manages $1.7 trillion and holds stakes in 9,000 companies across 70 countries.
Although labeled a pension fund, it transfers its returns to the government, which can spend only the expected annual returns. Singapore’s Temasek Holdings and GIC Pvt Ltd are well-known in India, having invested in companies like Bharti Airtel Ltd, HDFC Bank, ICICI Bank, and DBS, the Singapore-based lender that received the Reserve Bank of India's permission to acquire the troubled Lakshmi Vilas Bank. India’s National Infrastructure and Investment Fund is an associate member of the International Forum of Sovereign Wealth Funds, which includes around 90 SWFs managing over $8 trillion in assets.
Following the global financial crisis, the International Monetary Fund (IMF) urged the creation of a forum for SWFs, hoping they would serve as stabilizing forces in the turbulent world of global finance. Around two dozen SWFs, along with the IMF’s International Monetary and Financial Committee, collaborated to develop a set of guidelines known as the Santiago Principles, named after the Chilean city where the final drafting meeting took place. These principles emphasize transparency, governance, regulatory compliance, and financial stability while balancing risk and reward, providing a reassuring framework.
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