This refers to the editorial “Calibrated globalisation” (March 2). It would be worthwhile for the government to restrict its movements on capital account convertibility to baby steps. Not only is the country ill-prepared in terms of the usual fiscal management metrics, but it has also been exposed to a foreign investment pattern that has been historically capricious and unscientific. As evidenced in the recent past, this has led to significant volatility in stock markets, affecting small investors substantially. In that context, the finance minister’s proposal in the Budget to allow foreign institutional investors (FIIs) to invest in Indian mutual funds (MFs) raises concern. For millions of investors, MFs have been like safer landmasses amid the increasing choppiness of equity markets. However, with the Budget proposal fructifying, even MFs would be found engulfed in that cesspool, reducing their worth as safer avenues. The other proposal of raising the FII investment cap on infrastructure bonds is more welcome, given the minimum lock-in period of three years and the pressing need for funds to meet the ambitious 12th Five Year Plan targets.
Debal Mitra, Mumbai
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