Inbuilt checks on foreign funds if distortions arise: Mukherjee
With inflows from foreign funds exceeding $15 billion this year and hardening of the rupee, Finance Minister Pranab Mukherjee on Wednesday said India has a system of monitoring such flows and will take counter-steps if distortions emerge.business Updated: Nov 18, 2009 13:57 IST
With inflows from foreign funds exceeding $15 billion this year and hardening of the rupee, Finance Minister Pranab Mukherjee on Wednesday said India has a system of monitoring such flows and will take counter-steps if distortions emerge.
"It is not a matter of concern. We have a system of monitoring the flows," Mukherjee told reporters on the margins of an event organised by the Union Bank of India when asked about the large inflows from foreign institutional investors.
"Whenever we find there are some distortions, we have the arrangement to counter-act. Therefore, it is not disturbing," the finance minister added.
As per statistics available with the markets watchdog, Securities and Exchange Board of India, inflows from foreign funds into the country's equities market amounted to $15.142 billion this year, taking their cumulative investments till date to $70.295 billion.
The large investments, coupled with a much higher inflows on account of foreign equity this year, have contributed largely to an appreciation in the value of the Indian rupee, adding to the woes of exporters and policy-makers alike.
The Associated Chambers of Commerce and Industry (Assocham) has even recommended a tax on foreign funds and moderate deterrents, as large inflows are gradually becoming a cause of concern for policy-makers including the central bank.
"Imposing 2 percent tax on foreign institutional investors is recommended as has been done by Brazil in the recent past so that possible imbalances in capital market are corrected and India doesn't repeat the events of 2007," the chamber said.