'Replace PSU dividend pressure with sovereign wealth fund': Compcircle’s Kondawar proposes strategic pivot

Aditya Kondawar, Partner and Vice President at Compcircle, has a bold suggestion for the government ahead of the Union Budget 2025. Rather than relying on public sector undertakings (PSUs) to shoulder the burden of dividends, he proposes a strategic pivot — establishing a sovereign wealth fund (SWF). This, he believes, could significantly amplify India’s global investment influence. 

“India should strongly think of a Sovereign Wealth Fund (SWF) now. Instead of squeezing PSUs for dividends, Govt can ask the PSUs to fund the SWF; LIC can be the anchor investor. Some tax rate breaks can be also given by asking for money in the SWF. Let's start investing across the globe and India via our own SWF!” Kondawar wrote on X. 

A sovereign wealth fund is essentially a state-owned investment pool, typically financed through surplus revenues like those from commodity exports or foreign exchange reserves. These funds are designed to invest in a diversified range of assets — stocks, bonds, real estate, precious metals, and even alternative avenues such as private equity and hedge funds. By investing globally, SWFs help nations secure financial returns while strengthening their economic footprint. 

India already has a sovereign wealth fund in the form of the National Investment and Infrastructure Fund (NIIF), but Kondawar’s proposal hints at scaling this concept further. His vision suggests a more robust, globally active fund, backed by domestic financial giants like LIC, with strategic contributions from PSUs. 

The Singapore government’s SWF holds the distinction of being the largest foreign sovereign investor in India, followed closely by Norway. Other prominent funds like the Abu Dhabi Investment Authority (ADIA), Kuwait Investment Authority (KIA), Norwegian pension fund, and GIC Holdings Pte. Ltd. have steadily increased their stakes in Indian companies and startups, signaling growing confidence in the country’s economic prospects. 

These funds have placed significant bets on Indian giants such as Reliance Industries and HDFC Bank, underscoring the attractiveness of India’s growth story. Kondawar’s proposal taps into this momentum, suggesting that India itself could play on the global stage — not just as an investment destination but as an investor with considerable clout.