The Central Government on Wednesday said it was monitoring the foreign institutional investors’ (FIIs) record investments in the equities market and would act if it finds any kind of distortions but at the same time added that it was not a matter of concern.
FIIs have put in a record over Rs. 71,900 crore ($15 billion) in the equities market so far this year and have driven up valuation of the rupee against the dollar, hurting exporters already hit by the global slowdown. “The FII inflows are not a matter of concern. We have a system of monitoring. Whenever we find that there are some distortions, we have the arrangement to counter them. Therefore, it is not disturbing,” Finance Minister Pranab Mukherjee told journalists here at a function organised by Union Bank of India to announce 100 per cent networking of Kashi Gomti Samyut Gramin Bank and Rewa Sidhi Gramin Bank under core banking solutions (CBS) platform and National Electronics Funds Transfer (NEFT) facilities for customers of regional rural banks sponsored by the bank.
After turning negative, following the collapse of U.S. financial services icon Lehman Brothers since the middle of September last year, FII inflows into the Indian stock markets have begun to rise sharply. The inflow is the highest-ever investment made in rupee terms in a single year. FIIs have also purchased debt worth Rs. 11,890 crore (net) during the period. This has led to appreciation of the rupee by over five per cent during the last six months, hitting exporters suffering from poor demand in traditional markets.
On the other hand, Mr. Mukherjee said the country would have to import rice during the 2009-10 marketing season (October-September) despite surplus in godowns to meet the shortfall in kharif crops.
Mr. Mukherjee said “We started rice season that is from October 2009 with almost six million tonnes of surplus. Still there is a projection that there is some shortfall of kharif crops. So to make it up, we have to make some imports,” he added. However, he did not come out with the quantum of export and its timing. “Exactly what quantum and at what time, I cannot say,” he said.
The government estimates that there would be a shortfall of over 15 million tonnes in the 2009-10 kharif season.