No plan to ease foreign cap on debt, says official

India has no plan to raise the limit on foreign investment in government debt securities as of now, a senior finance ministry source said on Tuesday.

“The existing limit has not been reached. Where is the question of raising it. There is no such move as of now,” the official told Reuters.

This comes as a counter to the Economic Times (ET) report on Tuesday that said policymakers may raise foreign investment limit on government debt securities citing an unnamed official close to the matter. It also indicated this was to ensure demand for the government’s record borrowing plan of Rs 4.51 trillion in the 2009-10.

The borrowing target, is three times more than last fiscal year’s borrowing and is aimed to bridge a fiscal deficit of 6.8 per cent, the biggest in 16 years. Foreign investment in government debt is capped at $5 billion and at $15 billion in corporate debt.

“The overall investment ceiling in government securities will be relaxed after the current limit is breached,” ET had quoted the official as saying.

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