This refers to ‘Myopic’ (ET, Jun 26). The RBI’s move is not expected to cause much volatility in capital inflows. The cap on foreign investment in government bonds has been increased from $15 billion to $20 billion, but its effect on capital inflows will be small as it amounts to only about 2.5% of the total debt. In fact, as a short-term measure to increase dollar inflows, RBI could have increased the cap further, as there is a good demand for sovereign bonds among FIIs. Other measures, like liberalisation of terms and conditions for FII investment in infrastructure, are not expected to attract much increase in investment due to delays in project implementation.
- V SRIDHAR
No comments:
Post a Comment