In a change of stance, the finance ministry on Friday indicated that it could examine the option of floating sovereign bonds to address the widening current account deficit and the weakening rupee.
India’s CAD — the difference between the outflow and inflow of foreign currency— touched 4.8% of gross domestic product (GDP) in 2012-13 owing to high imports, including gold.
Chief economic adviser Raghuram Rajan held a meeting with several bank executives including Citibank, Barclays and Bank of America among others.
“They have given us a lot of suggestions including sovereign bond issue….all options are on the table and we will examine as and when the need comes,” Rajan said. “This was not a meeting to take decisions, it was to take inputs. This dialogue will continue.”
Previously the government has issued sovereign bonds in 1991, 1998 and 2001. India Development Bonds in 1991 fetched $1.6 billion, the Resurgent India bonds in 1998 raised $4.2 billion and in 2001 the India Millennium Deposits fetched $5.5 billion.