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New Delhi: The government does not have any plans to restrict capital inflows in to the country, finance minister Pranab Mukherjee said at the Economic Editors Conference here on Tuesday .
India has received capital flows of over $42 billion this year—more than four times of the net inflow of $9.1 billion during 2008-09. Enhanced capital inflows could lead to hardening of the rupee, which, in turn, could shave off exporters’ earnings.
“The flow of forex into India is because people are confident of Indian economy’s resilience. Despite the world economy collapsing, economies of India and Chinese survived and the world output increased,” Mukherjee said. “I am not thinking of putting any curbs on capital flows,” he asserted.
Mukherjee also clarified that the finance ministry is yet to take a formal stand on the issue of certain Indian private banks being designated as foreign-owned under the provisions of foreign investment guidelines Press Notes 2, 3 and 4 released by the Department of Industrial Policy and Promotion in February, 2009. “We are in touch with them (DIPP). If required, we will issue clarifications.” Mukherjee added.
Under the new FDI norms notified in February 2009, banks like ICICI and HDFC are treated as foreign owned-Indian controlled entities.
The finance ministry and the RBI are yet to formally intimate DIPP about their stand on the issue, government officials said.
“The DIPP had not got any formal feed back on the matter. Hence, the current provisions of the Press Notes continue to apply to the banks and they continue to be designated as foreign-owned,” a DIPP official told FE.
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