No curbs on foreign capital inflow: Govt

Foreign Institutional Investors’ (FIIs) inflows into the securities markets have turned positive after being hit by the global meltdown last fiscal. FIIs have bought stocks worth about Rs 75,000 crore this fiscal so far,after taking out around Rs 37,520 crore from the Indian stock markets a year ago. “As of now,it is not a cause for concern… We don’t see any need for any specific action in this regard,” Ashok Chawla said at the 3rd ICRIER Inwent annual conference in Delhi . Increase in foreign money inflow has led to the rupee appreciating 8.24 per cent against the dollar this fiscal to date,creating worry lines for exporters who have already been hit by weak demand in the West for their goods.

The secretary said that the Securities and Exchange Board of India (Sebi) and the Reserve Bank of India have been closely monitoring the situation on a day-to-day basis.

“We are watching the situation while the Reserve Bank and Sebi are seeing what is happening in terms of inflows and equity markets,” Chawla said. There are initial indications of recovery in the country but they are not yet robust,the secretary said,adding that getting back to 8 to 9 per cent growth was not possible unless there is a recovery internationally and a pick-up in exports from India.

On the fiscal deficit for the current financial year,he said,“We have to do a fair amount of borrowing and the fiscal deficit is in the region of about 7 per cent… which is 6.8 per cent,” the finance secretary said.

Replying to a query on the struggling corporate bond market and a lack of robust investment in pension and insurance sectors,he said the government would take appropriate steps to strengthen financial sector reforms.

“This is something which is part of the overall policy direction of the government… So,there will be steps in terms of where there is legislation required,legislation will be brought before Parliament,where there are procedural and executive steps to be taken,those will be taken,” he said.

“The government will focus on creating an enabling policy for creating a strong and secure futures and derivatives market with healthy regulation,” a senior finance ministry official said on the sidelines of the conference.