D Subbarao, secretary, finance, ministry of finance has hinted a rollback of the recently imposed restrictions on raising of resources through external commercial borrowings (ECBs) by India Inc.
?We had imposed those restriction to control capital inflows. We would like to roll it back at the earliest. For infrastructure sector we would deal with the issue on a priority basis,?? said Rao while participating in a seminar on ?Public Private Partnership:The way forward? as part of the US ?India CEO Forum Infrastructure Investment Conference on Monday.
?It is easier to control capital inflows through ECBs than restricting other inflows like foreign direct investment,?? he said.
It is necessary to guard capital flows that has touched 5% of the GDP while current account deficit remains at 1.5%, he explained. ?We need to expand absorbtion capacity of the economy,?? he said.
Subbarao also said that his ministry has received a suggestion to ban foreign direct investment in domestic real estate sector.
However, he refused to confirm that the suggestion is from the Reserve Bank of India (RBI).
?We usually receive suggestions from many sources and this is one of them,?? he said, adding that the ministry is yet to finalise its decision over the issue.
On the use of forex reserves for the domestic infrastructure projects, Subbarao said the ministry is discussing the modalities of such use with the RBI.
?On the basis of budgetary provision we are discussing the issue with the RBI,?? he said.
On the implementation of the proposals of Percy Mistry committee report on making Mumbai as the international finance centre , Subbarao said the prime minister Manmohan Singh has called for a meeting of key authorities and have asked them to implement a fewplans.