SOVEREIGN WEALTH FUND (Syllabus: GS Paper 3– Economy)

News-CRUX-10     12th September 2023        

Context: Saudi Arabia recently announced its intention to explore the establishment of an office for its sovereign wealth fund (SWF) in Gujarat International Finance Tec-City (GIFT) with the aim of promoting and facilitating investments.

Sovereign Wealth Fund (SWF)

  • About: It is also known as Social Wealth Funds, consisting of funds generated and owned by the government.

o These funds are typically sourced from state-owned natural resource revenues, trade surpluses, bank reserves, and similar financial assets.

  • Types of SWF: Savings Funds, Stabilization Funds, Reserve Investment Funds, Strategic Development Sovereign Wealth Funds (SDSWF) & Pension Reserve Funds
  • Commodities: Created through commodity exports, either taxed or owned by the government
  • Non-Commodities: Usually created through transfers of assets from official foreign exchange reserves
  • India’s Sovereign Wealth Fund: National Investment and Infrastructure Fund (NIIF)
  • Set up by: Government of India in 2015
  • Aim: To attract investments from both domestic and international sources for infrastructure development in commercially viable projects both Greenfield and Brownfield, including stalled projects.