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Govt “looking at all options” to attract capital: official

Govt “looking at all options” to attract capital: official
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First Published: Wed, Dec 21 2011. 05 06 PM IST

Updated: Wed, Dec 21 2011. 05 06 PM IST
New Delhi: The Indian government is looking at all options to attract foreign capital, a senior finance ministry official said, adding that he hoped Moody’s move to unify India’s local and foreign currency bond ratings would help reverse recent capital flight.
Foreign funds have sold a net $300 million of Indian shares so far this year, in sharp contrast to the record investment of more than $29 billion in 2010.
The withdrawal of foreign funds has been largely responsible for making the rupee the worst-performing Asian currency this year. The Indian currency has fallen nearly 20% against the dollar from its July highs.
Moody’s said on Wednesday it had unified India’s local and foreign currency bond ratings at Baa3 and said the outlook on the ratings was stable.
“We are looking at all options to attract capital inflows... what is happening right now is a temporary phenomenon,” the official, who did not want to be identified, told reporters.
He said the government may reduce the lock-in period for some infrastructure bonds from three years to one year, and may also reduce the residual maturity of these bonds, to make them more attractive to foreign investors.
“We believe Moody’s action will make other rating agencies examine their methodology and look at India positively,” the official said.
“India deserves at least two notches rating upgrade,” he said.
The official said the government was confident India would attract a robust flow of funds from foreign institutional investors in the long run.
A spate of gloomy economic news has weakened investor confidence in Asia’s third-largest economy.
The government said earlier in December that it expected the economy to grow by 7.25 to 7.75% in the fiscal year ending next March, down sharply from an estimate of 9% issued in February.
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First Published: Wed, Dec 21 2011. 05 06 PM IST
More Topics: Foreign Capital | Investment | Moody | Rupee | Currency |