Financial Regulatory Forum

No plan to ease foreign cap on India debt-source

July 21, 2009

   NEW DELHI, July 21 (Reuters) – India has no plan as of now to raise the limit on foreign investment in government debt securities, a senior finance ministry source said on Tuesday, after a newspaper reported policymakers may ease the cap.
   “The existing limit has not been reached. Where is the question of raising it. There is no such move as of now,” the official, who did not wish to be named, told Reuters over the telephone.
   The Economic Times newspaper, citing an unnamed official close to the matter, had reported on Tuesday that policymakers may raise foreign investment limit on government debt securities.
   It also indicated this was to ensure demand for the government’s record borrowing plan of 4.51 trillion rupees ($93 billion) in the 2009/10 year.
   The borrowing target, unveiled in the July 6 federal budget, is three times more than last fiscal year’s borrowing and is aimed to bridge a fiscal deficit of 6.8 percent, the biggest in 16 years.
   Foreign investment in government debt is capped at $5 billion and at $15 billion in corporate debt.
   “The overall investment ceiling in government securities will be relaxed after the current limit is breached,” the newspaper had quoted the official as saying.
   Foreign investors are close to exhausting their investment limits in government debt, while they have plenty of headroom in corporate debt, the paper had said. ($1 = 48.3 Indian rupees) (Reporting by Rajkumar Ray and Saikat Chatterjee; Editing by Ranjit Gangadharan) ((anurag.joshi@thomsonreuters.com; Tel: +91-22-6636-9038; Reuters Messaging: anurag.joshi.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) Keywords: INDIA DEBT/INVESTMENT 
  
Tuesday, 21 July 2009 11:04:43RTRS [nBOM486409] {C}ENDS

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