Anil:
You make some very good points.
Btw, check out the following article :
india-today.com
Also keep in mind that they are still not telling how much of the $4.2
billion is "new" money. If a substantial part of the total amount is
"old" money (from other NR accounts paying lower interest), then all
that India has done is to replace a lower interest loan with a higher
interest loan! Not a very smart thing at all...
**** EXCERPTS FROM THE ARTICLE :
From the NRIs' point of view too, it was a golden opportunity. Without
ploughing in much of their own money, they could make an easy 0.75 per
cent gain by simply borrowing from the foreign banks and investing
in the ribs.
[...]
But there are some who differ. They believe the Government could
have worked on cheaper options. Apart from the higher
interest rate burden (rib rates are about 1.5 per cent more than
existing NRI scheme rates), the exchange rate cover will also cost a
packet.
According to an estimate, if the rupee was to lose a
mere 5 per cent of its value against the dollar every year over the next five years, every $1 billion (Rs 4,350 crore) inflow would cost the exchequer about Rs 400 crore.
[...]
Another question being raised is how much of the total inflow is new
money. The argument is that a substantial part of the
$3.5 billion expected to come in could be black money being converted
to white or being transferred from existing NRI schemes. An upbeat
Government, however, dismisses such contentions. "It's money in your
foreign exchange kitty and it gives a great feeling of comfort,"
says Mohan Guruswamy, adviser to the finance minister.
[...]
Everything will now depend on how the funds are utilised. What the
SBI will do with the money is not clear yet. Though
there is mention of a substantial investment in infrastructure, the
projects are yet to be identified. Unless the Government gets cracking on high-return yielding options, the celebration may be shortlived.
**** END EXCERPTS
Dipy. |
