Money: Hot, cold & lukewarm

In their zeal to make the newly-formed Qualified Foreign Investors (QFI) route look attractive, some finance ministry officials apparently overshot their brief and referred to money coming in through the Foreign Institutional Investor (FII) route as “hot money”. A reaction to that came at a recent forum in which Mumbai-based tax consultant Ameet Patel, observed, “If FIIs who bring in ‘hot money’ can enjoy so many tax benefits, then QFIs who are supposed to bring in relatively longer-term money should be given even better incentives.” Sensing that the “hot money” remark was acquiring a negative connotation and slowly catching fire, C S Mohapatra, another senior finance ministry official, moved in quickly to douse it. “When we call FII inflows hot money, we are referring to the frequency of flows in relative terms. There is no reference to the quality. We can say QFI is cold money whereas FII money is lukewarm money,” he said.