Govt for more policy changes to encourage inflows: Chawla

After easing external commercial borrowing norms, the government is preparing to unleash more measures to encourage capital inflows to ensure that liquidity crisis do not hit the Indian financial systems, says a top finance ministry official.     

"We have already done something in ECB. It is possible to do more as we go along. We will take more policy change to allow more capital inflows," Department of Economic Affairs Secretary Ashok Chawla told NDTV in an interview.     

Asked about the effects of ongoing global financial crisis on India, he said, "India is not entirely shielded from the effects of what is happening in developed countries. The impact so far as India is concerned is indirect.     

"Our banks and financial institutions are not hit by what is happening in these countries. What is impacting us is that capital from these countries will see a dip because they have to handle their own funds," he said.     

In a bid to encourage flow of fund, the government last month increased the overseas borrowing limit to $500 million for infrastructure companies.     

At the same time, it widened the ECB window by including mining and petroleum into infrastructure sector.     

Pinning hopes on action plan finalised by G-7, Chawla said from the crisp, aggressive, five-point action plan finalised here, markets will take it as a sign of serious endeavour on part of the developed countries to proceed with setting their house in order.     
"This will send a positive signal and markets next week should open on a calm note," he said.     

The five-point plan includes decisive action and use of all available tools, take all necessary steps to unfreeze credit and money markets kickstart secondary mortgage markets.