The Hindu Business Line : FII flows

This is with reference to article "FII flows and RBI's dilemma" (Business Line, January 14). The report rightly says the fundamental issue is capital account and currency policy.

The RBI would like to take credit for steering the country through the foreign exchange crisis of the last decade.

But, it was reform and liberalisation in forex and economic policies that initiated results.

The RBI, in its currency report, justifies holding currency reserves of $135 billion on the claim that it is responsible for national balance sheet. This is not true as major corporates borrow dollars and the RBI in turn buys these dollars to invest them in US securities.

FDI flows will increase once the rules are made easy, and investor gains confidence in doing business in India.

So, the RBI instead of contemplating controlling the market and returning to pre-reform days, should liberalise it and open it to Capital Account Convertibility.

Venkatesh S. Bijoor

e-mail

Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Dual citizenship — Driven by pride and pragmatism

Broad-banding competition

`Cut the fat, not the muscle'

Leg up for infrastructure

Global B2B mantra — On a new learning curve

Regulatory authorities — Role in a deregulated economy

`Controlling fiscal deficit is the biggest concern' — — Dr Raghuram G. Rajan, Economic Counsellor and Director of Research, IMF

NRI meet

FII flows