By IANS,
New Delhi: The government has no plan to put any cap on flow of funds from foreign institutional investors (FIIs), which have pumped in nearly $25 billion so far this year, Finance Minister Pranab Mukherjee said Tuesday.
“At this time I am not thinking of putting any cap on the FIIs because I know that if I have $45-50 billion inflow from FIIs, it will be insurance towards my current account deficit,” Mukherjee said at the annual Economic Editors’ Conference here.
Overseas funds have pumped in $24.28 billion so far this year, the highest in a single calender year. FIIs have invested over $6 billion in October.
He said a sharp increase in inflow of funds from FIIs has provided cushion in controlling current account deficit. “I am confident with the flow of FIIs and foreign exchange availability, I will be able to contain current account deficit at around 3 percent of the GDP.”
Mukherjee admitted that inflows of foreign funds have put pressure on the Indian currency.
“The current levels of capital inflows, which exceed financing requirements of our current account deficit, have put pressure on the rupee, resulting in its appreciation in the last few months. The has implications for our exports.”
He said the Reserve Bank of India was keeping an eye on it and would take appropriate measures as and when required.