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After a meeting between finance minister P Chidambaram, finance ministry officials, bankers and foreign institutional investors in Mumbai on Saturday, the ministry said steps to attract capital flows to fund the current account deficit can be expected within a week or 10 days.
Though the FM did not speak to reporters, financial services secretary Rajiv Takru said, “All measures to attract fund flows are under consideration. I think you should see something coming up shortly, say within a week or in the next 10 days.”
Bankers present at the meet said the FM took suggestions to increase dollar inflows through NRI deposits. “The meeting was mainly to seek suggestions and ideas on what can be done on capital inflows. I think it was a good and positive meeting,” ICICI Bank’s Chanda Kochhar said. Bankers added that the FM emphasised the need to shore up NRI deposits
Those present included economic affairs secretary Arvind Mayaram, SBI’s Pratip Chaudhuri, ICICI’s Chanda Kochhar, HDFC Bank’s Aditya Puri, Citigroup India’s Pramit Jhaveri, Bank of India’s Vijayalakshmi Iyer, Canara Bank’s RK Dubey and StanChart India’s Anurag Adlakha.
Mayaram said the interaction with FIIs was to gauge their concerns surrounding the current account deficit and structural reforms. He said a lot of structural reforms are taking place, like clearing gas linkages for power projects, and they will begin to show results in the current year itself. “We are hopeful it will have a reflection on growth in the subsequent quarters,” he said. Takru said 27 large infra projects have been cleared in the past one month and nine more projects would be taken up by the Cabinet in the coming week.
Mayaram said tapering of quantitative easing programme by the US will have little impact as it will be compensated by strong capital inflows from the FDI side and by issuance of overseas bonds by public sector entities.He said of the $11-12 billion of inflows expected, $4 billion would be through quasi-sovereign bonds.