India will not bend over backwards to get included in the global bond indices, a top finance ministry official said on Saturday.
Deploying a sartorial analogy, Finance Secretary TV Somanathan said the indices are an exclusive club or gymkhana, which insists on entry only for those wearing ties.
“…if we get into this club, it will be with our dhoti and saree. We will not change our domestic policies to suit foreign investors,” he said, addressing a post-budget interaction with industry players in the financial capital.
He said there are both positives and negatives of such an inclusion, which was spoken about in a previous budget announcement, and India will not “bend over backwards” to gain entry.
India’s policies will be based on domestic requirements, and there will not be any change to the stance to suit the fancy of global bond investors, he said.
The global indices should allow entry for India only if such a stance is acceptable to them, he said.
Positives of gaining entry include higher fund flows, but the same also exposes us to risks of volatility and pullouts due to non-domestic factors, Somanathan said, pointing to the experience of “destabilisation” in some east-Asian economies.
Ajay Seth, the economic affairs secretary, hinted that there is no immediate plan of joining the indices.
“At the moment, there is quite a bit of uncertainty at the global level both in terms of the exchange rate and interest rate etc. It is not the right time to press the pedal on that aspect.
“When the global markets are a little bit more uniform, then at that point of time this piece will have to be picked up again,” he said.