New Delhi: Finance Minister P Chidambaram is considering a demand for relaxing the curbs on external commercial borrowings in the wake of high domestic interest rates borne by India Inc.
“I have heard a number of people make out a case. Only when the case is decided we will know what the decision is,” Chidambaram had said yesterday, after briefing on decisions taken by the CCEA.
The Finance Minister was replying to a query on whether there was a case for relaxing the ECB norms so as to provide at least the productive sectors access to capital.
According to sources, the government may consider relaxing external commercial borrowing (ECB) norms by this month-end to help India Inc access funds overseas.
However, the ECB policy should not be linked to the rupee value, sources in the finance ministry had said.
“The ECB policy is independent of status of rupee. ECB relaxation will be based on credit requirements of productive sectors. We believe there is a strong case for easing ECB norms,” sources had said.
The Reserve Bank of India and finance ministry officials are expected to meet by this month-end to take a view on easing the ECB norms.
Government had last year imposed curbs on ECB, limiting remittance of such funds only up to $20 million for rupee expenditure and that too with RBI approval.
However, earlier this year, this limit was relaxed to $100 million for infrastructure companies and $50 million for other firms.