which will result in dollar savings.
SOVEREIGN WEALTH FUNDS
Sovereign wealth funds (SWFs) will be allowed to invest in tax-free bonds floated by state-run infrastructure finance companies. The government has earmarked 30 percent of these bonds specifically for investment by SWFs.
Indian Railway Finance Corp Ltd (IRFC), Power Finance Corp (PFC) and India Infrastructure Finance Co Ltd (IIFCL) will raise $4 billion from overseas via quasi-sovereign bonds to finance long-term infrastructure. IRFC will raise $1 billion. PFC and IIFCL will raise $1.5 billion each.
The government aims to reduce imports of non-essential import items such as fridges and TVs. Chidambaram expects some dollar savings from these tariff restrictions. However, he is yet to act upon the plan, and there are some concerns they could run afoul of WTO agreements.
OVERSEAS CORPORATE BORROWING
India has relaxed guidelines on borrowing by companies from overseas money markets, known as external commercial borrowing. Chidambaram says the relaxed guidelines will likely bring in extra $2 billion this fiscal year.
- Under the new guidelines, subsidiaries of multi-national companies in India will be allowed to raise money from their parent companies.
- Maintenance, repair, and operations facilities will be deemed a part of airport infrastructure.
- The government is talking to a number of private sector companies which have plans to raise money abroad.
OIL COMPANY FINANCE
State-run oil companies will raise additional funds from offshore money markets and trade finance. This will fetch an extra $4 billion. Indian Oil Corp will raise $1.7 billion. Bharat Petroleum and Hindustan Petroleum will raise $1 billion each. An additional $250 million will come from trade finance.
NON-RESIDENT INDIAN DEPOSITS
India has liberalised deposit schemes for non-resident Indians (NRIs). Chidambaram says this will likely bring in $1 billion.
- Under the new guidelines, incremental flows of deposits into Non-Resident Rupee Account Scheme (NRE)/Foreign Currency Account Scheme (FCNR) will be exempt from cash reserve ratio and statutory liquidity ratio requirements.
- In NRE deposits, the interest rate will be deregulated on deposits with maturity of 3 years or more, while in FCNR (B) deposits of 3-5 years, the ceiling has been relaxed to LIBOR plus 400 bps from 300 bps.
HIGHER FDI LIMITS
India has raised the cap on foreign direct investment in asset reconstruction companies to 74 percent from 49 percent, to help attract capital inflows to support a sagging rupee.
FOREIGN EXCHANGE OUTFLOWS
The RBI has announced measures to reduce foreign exchange outflows by resident Indians.
- It has cut the limit for overseas direct