New Delhi: The finance ministry on Wednesday said the surge in foreign capital flow into India, powered by an initial recovery in the global economy, is not a cause for concern and no action is required to arrest it.
Widening gap: Finance secretary Ashok Chawla says the budget deficit is estimated at more than 7% of the GDP for 2009-10. Ramesh Pathania / Mint
Funds invested by foreign institutional investors (FIIs) into the securities markets have turned positive after being hit by a global meltdown. FIIs have poured in a net Rs75,000 crore so far in the current fiscal year beginning April, after taking out a net Rs37,520 crore a year ago.
“As of now, it is not a cause for concern,” finance secretary Ashok Chawla said. “We don’t see any need for any specific action in this regard.”
He said the government as well as market regulator Securities and Exchange Board of India and the Reserve Bank of India are monitoring the situation closely.
Chawla’s comments came amidst growing call for action by exporters as a rising rupee has hit their competitiveness at a time time when they are battered by slackening overseas demand.
The rupee has appreciated 8.24% against the US dollar this fiscal year.
Chawla also said India’s budget deficit is estimated at more than 7% of the gross domestic product (GDP) for the year ending 31 March and 40% of the government’s spending is funded by borrowing.
The government’s budget for the fiscal year estimates the deficit at 6.8% of the country’s gross domestic product.
Chawla also said he sees signs of an economic recovery, though it isn’t robust. The economy can’t return to a path of 8% to 9% growth until global demand revives, he said in New Delhi.
(‘Bloomberg’ contributed to this story.)