Now Reading: Govt calls PSB meeting to attract foreign capital, stabilise rupee
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Govt calls PSB meeting to attract foreign capital, stabilise rupee
The government has called a two-day meeting with all public sector lenders on August 17 and 18 in New Delhi to brainstorm ways to attract foreign investment, stabilise the rupee and bridge…
The Story in Brief
The government has called a two-day meeting with all public sector lenders on August 17 and 18 in New Delhi to brainstorm ways to attract foreign investment, stabilise the rupee and bridge the current-account gap. Finance minister Nirmala Sitharaman will review proposals from bank chiefs on August 18. The Economic Times reports the meeting will also focus on improving deposit mobilisation, encouraging global capability centres, strengthening MSME credit and scaling agriculture.
Fresh foreign capital inflows are needed because India runs a current-account deficit, gross domestic savings are not enough to fund investment. IDFC First Bank chief economist Gaura Sengupta said CAD is expected to widen to 1.5-1.7% of GDP in FY27 from 0.6% in FY26 due to high crude oil prices. The RBI has offered a dollar-swap facility for state-run lenders, and has attracted $40 billion in inflows until July 30. However, the rupee still fell 11% in FY26.
The Indian Opinion
The finance ministry’s focus on durable FDI over hot FCNR money is sensible, but the numbers tell a cautionary tale. The rupee fell 11% in FY26 even after $36 billion in FCNR deposits flowed in. Those deposits will mature in 3 to 5 years, creating a future dollar-repayment obligation. Whether the government can sign enough trade deals and build global capability centres fast enough to replace that with stable FDI is the real test. Watch the CAD number: if it widens beyond 1.7% of GDP, all these tactics may only be buying time.
Source: economictimes.indiatimes.com
This story was synthesised by AI from the source linked above.
