‘Failure to build consensus’

.....How do you assess the Reserve Bank of India’s (RBI) measures to ensure capital flows by easing rules pertaining to external commercial borrowings (ECBs) and allowing foreign institutional investors (FIIs) to invest in government securities?

These measures have to be carefully examined because while speaking on the Finance Bill in the Lok Sabha I had said that not only was the current account deficit going beyond sustainable limits but what was even more worrisome was the fact that 70 per cent of the CAD, as per data available with me, was being financed by short-term debt. Commenting on a similar situation way back in 1991, Dr I.G. Patel said that short-term debt is like sudden death because if they don’t roll over and insist on repayment, you have to repay. So short-term debt is even worse than FII money..........

 

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