Famous FCNR(B) Deposit Scheme Reeked Of Re-Run Of 1991 Bop Crisis: White Paper


(MENAFN- IANS) New Delhi, Feb 8 (IANS) The White Paper on Indian Economy tabled by Finance Minister Nirmala Sitharaman in the Lok Sabha on Thursday said that the famous Foreign Currency Non-Resident [FCNR(B)] deposit window for NRIs was actually a call for help when there was a large depletion of the foreign exchange reserves.

Under the UPA government, foreign exchange reserves had declined from around $294 billion in July 2011 to around $256 billion in August 2013.

By end-September 2013, Forex reserves were just enough to finance little over six months of imports, down from 17 months in end-March 2004.

"Forex reserve to external debt ratio tanked from 95.8 per cent in FY11 to 68.8 per cent in FY14. To salvage an ever-worsening situation, the Reserve Bank of India (RBI) opened a special window for FCNR(B) to attract US dollar deposits at a high premium in August-September 2013.

"The costly solution to the above self-created predicament reeked of a re-run of 1991 when India had to approach the IMF for assistance during a Balance of Payments crisis," the White Paper said.

However, a dubious distinction from 1991 is that the amount raised from NRIs through FCNR(B) ($26.6 billion) was 12 times the 1991 IMF bailout ($2.2 billion). The redemption of this high-cost dollar debt was left behind for discharge in FY16, a liability that has since been honoured by our government without disruption," the White Paper said.

--IANS

san/arm

MENAFN08022024000231011071ID1107828953


IANS

Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.