Govt. takes measures to increase Forex inflows and check deficit
In order to check the increasing Current Account Deficit (CAD) and curtail the rupee downslide due to an unstable foreign exchange market, the government has announced a set of measures to increase the Forex inflows by an additional $11 billion during the current fiscal by easing overseas borrowing norms. The government has set the target to contain the CAD at $70 billion, or 3.7 % of the GDP in this fiscal.
Upcoming measures by Govt. to increase Forex inflows and check deficit:
- To hike the customs duties on gold, silver and other non essential goods to contain the import bill.
- The interest on foreign currency non-resident (NRI/NRE) accounts will be liberalized to attract more deposits.
- PSU finance companies Indian Railway Finance Corporation (IRFC), Power Finance Corporation (PFC) and India Infrastructure Finance Company Limited (IIFCL) will mop up $ 4 billion by issuing quasi-sovereign bonds for infrastructure sector development.
- External Commercial Borrowings (ECBs) will also being eased to enable the oil PSUs to acquire dollars for financing their import requirements.
- Sovereign Wealth Funds (SWFs) would be allowed to invest up to 30% in tax-free bonds to be floated by PSU financial institutions and the RBI would also issue circulars permitting MNC subsidiaries in India to raise funds from their parent companies.