The finance ministry is considering increasing the foreign institutional investment (FII) limit in the local debt market, finance secretary Ashok Chawla said on Monday.
Currently, FII investment in government securities and corporate debt is capped at $5 billion and at $15 billion, respectively.
?We are looking at that. But that is not just dependent on this issue; it is dependent on a number of factors,? Chawla said on the sidelines of an Assocham seminar.
Chawla also said he did not expect any change in the government?s market borrowing plan in the first half of the current fiscal year that started on April 1. The government is on track to borrow Rs 2.87 lakh between April and September.
However, higher-than-expected proceeds from the 3G mobile spectrum auction has raised speculation that the government?s borrowing in the first half of 2010-11 could be lower. Chawla, though, said the auction money would not have any impact on the government?s borrowing plans at this point of time.
On day 23 of the 3G auction, the government?s revenue crossed the Rs 45,000-crore mark, as compared to Rs 35,000 crore estimated in the Union Budget 2010-11.
The finance secretary further said India would see minimal impact from the Greek debt contagion despite some likely capital outflows in the near term. ?As far as India is concerned, the impact on us will be minimal. In fact, in the short run?that is, purely in the short run?it might help us in terms of India being regarded as a relatively safer haven,? he said. The European Union and the International Monetary Fund on Monday agreed on a Euro 750 billion ($1 trillion) bailout package to prevent a sovereign debt crisis spreading through the euro zone.
?I think we are immune. We were immune when there was a much larger international financial crisis. The Greece crisis is much smaller in scale and magnitude to what the world has seen in the last one-and-a-half years,? he said.
