BRUSSELS, July 1: To contain further depreciation of rupee, HSBC India head Naina Lal Kidwai has suggested that the government consider issuance of sovereign bonds to attract foreign funds.
“Millennium Bonds kind of things could do some correction to ease the downward slide (of rupee). It will be a pity if it weakens beyond where it is,” Kidwai told PTI in an interview.
“It is not a bad idea (Millennium Bonds) because it would bring dollar into the country. It could temporarily contain the downward slide in the rupee,” Kidwai, who was here to participate in global India meet, said.
Hit by a weak global sentiment and subdued local macroeconomic performance, the rupee has lost over 25 per cent in the last one year. It touched a record of low of 57.32 against a dollar on June 22.
India in the past had raised funds from diaspora in the form of Resurgent India Bonds and India Millennium Deposits to tide over the balance of payment problems.
In 1998, India had launched the ‘Resurgent India’ bonds soon after the announcement of nuclear tests and sanctions that followed. The scheme raised USD 4.2 billion in capital.
Two years later, the government rolled out ‘India Millennium’ deposits on the back of rising fuel prices and slowing capital flows. It was able to garner USD 5.5 billion.
However, RBI Governor D Subbarao last month had said such schemes are not being contemplated at the moment.
“I cannot say in favour or out of favour (of sovereign bonds). We have done it in the past, it might be done in the future… But it’s not something that is being contemplated right now.” (PTI)
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