New Delhi: The foreign correspondent club led a discussion on ‘Is corruption destabilizing Indian economy?’ where the aspects of Indian economy were discussed by members of the club. Discussion led by FCC club president MR Venkatesh and chief guest Subrahmanyam Swamy.
Venkatesh said,” Successive Finance Minister have repeatedly liberalised the Foreign Direct Investment [FDI] rules but a report by C Rangarajan pointed out how more than 98 percent of domestic investment is funded by domestic savings that implies Indian economy is not dependent on FDI”.
FDI in 2004-05 was a mere USD 2 billion however, since 2005-06 the position turns dramatically when USD 7.8 billion was invested by Indian businesses. Subsequently USD 13.30 billion was invested in 2006-07, 18.50 billion in 2007-08, 18.60 billion in 2008-09, 13.60 billion in 2009-10, 16.8 billion in 2010-11, and 8.9 billion in 2011-12. In short, in the seven years between 2005-06 and 2011-12 India’s outbound FDI has been approximately a whopping USD 100 billion.
Black Money Act
Based on the recommendations of the Financial action task force (FATF), the RBI has come out with the circulars to banks by defining Political Exposed Person (PEPs). Accordingly “Politically exposed persons are individuals who are or have been entrusted with prominent public functions in a foreign country, e.g., Heads of States or of Governments, senior politicians, senior government/judicial/military officers, senior executives of stateowned corporations, important political party officials, etc.”
According to the FATF the RBI guidelines do not provide any “specific indication of what additional measures should be applied with respect to high risk customers, [PEPs for instance].” In short, the RBI circulars are vague. Did someone deliberately do so?
Banks go Belly-Up
Some of the premier names in corporate India are struggling under an increasing debt burden, with ten corporate houses having outstanding loans of Rs.5.47 lakh crore. [BS August 17, 2013]. The groups include Adani, Essar, GMR, GVK, Jaypee, JSW, Lanco Reliance ADA, Vedanta and Videocon, noted a Credit Suisse report entitiled ‘House of debt- revisited.’ Profits lower than Interest in most cases then. The report noted that the falling rupee would add to the companies’ woes. “Many corporates’ loans are 40-70% foreign currency denominated; therefore, the sharp depreciation in the rupee is adding to their debt burden.
Adani Enterprise and Reliance Comm have the largest percentage of borrowings through forex loans,” it added. Operating capacities would double for companies such as Adani Power, Reliance Power and GMR Infra if the projects are online in time.
