Capitalising on Cheap Funds

This refers to your editorial on 'capitalising on cheap funds' (Business Line dt,3rd March,2010). It is the best opportune time to bring in funds from international markets to give support for our economic growth targeted beyond 9 percent. Raising money from domestic market will become costly as the Reserve Bank has already signalled through its recent policy measures in increasing CRR,REPO and Reverse REPO rates. Further tightening is in the offing as per the indications. In view of the huge market borrowings envisaged by the Central Government, the chances of comfortable funds position for private sector's borrowings are being ruled out in the near future.

Since the international funds are cheap compared to domestic funds, it is advisable to encash the opportunity by corportes. Though the increase in inflows may have its own adverse impact on forex rate and inflation, still the advantages, the economy derive from huge productive investments and growth are very many and can certaily offset the disadvantages in the long run. What the economy now requires is huge resources for producive investments and when these are available at a cost affordable, why not take advantage ? As rightly pointed out in the editorial the confidence level in our Economy has gone up in international markets and capitalising the same for a good cause can only boost the confidence further.


Dr.T.V.Gopalakrishnan