Government and RBI building vital buffer against external volatility by appropriate liquidity measures to support inflow of foreign capital: FICCI

Mr Anant Goenka, President, FICCI said, 'FICCI welcomes the RBI's decision to keep the policy repo rate unchanged at 5.25 per cent while maintaining a neutral stance. This is a balanced and prudent decision given the heightened global uncertainty and maintaining policy stability at this juncture provides confidence to businesses and investors alike.' FICCI also welcomes the proactive regulatory measures announced by the Ministry of Finance and the RBI to strengthen external sector resilience and facilitate capital inflows. The decision to review the regulatory framework for Foreign Portfolio Investments in Government Securities along with rationalisation of taxes on such investments will deepen the G-Sec market and attract greater participation of FPIs in Indian government securities.

In addition, the steps introduced by the RBI like introducing forex swap facilities, facility for bearing full hedging costs to banks for raising foreign currency deposits from NRIs and OCIs will incentivise foreign capital inflows and strengthen India's external sector. 'Today's policy sends a reassuring signal that the government is dynamically utilizing its policy instruments to safeguard India's growth trajectory. By ensuring appropriate liquidity and introducing measures to support inflow of foreign capital, the government and the RBI are building a vital buffer against external volatility,' added Mr Goenka.

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