Accessing foreign funds

Govt should not ignore fundamental weaknesses

After shelving the idea of issuing foreign currency sovereign bonds to fund the fiscal deficit, the government has now decided to issue specified categories of securities to non-resident investors. The idea behind the proposal mentioned in the 2020-21 Budget is to further open up the sovereign debt market for foreign investors and make sure that Indian government bonds figure in global indices. Inclusion in global indices would result in a stable flow of foreign savings. Some of the large and long-term investors such as pension funds invest on the basis of the composition of such indices.
 
The government’s intention