This refers to "The Budget, the Survey and the trilemma" (July 29). While the demand for goods and services is crucial to promote investment, the resources to cater to the latter come mainly from the domestic household savings. An attractive return on savings induces the propensity to save but negatively impacts the allocation for consumption. Consequently, consumption expenditure will get confined to essentials. The inflow of foreign funds through foreign portfolio investment, foreign direct investment and against increased exports is rather beneficial than the raising of external savings through the issue of sovereign bonds in foreign currency. It is fraught with the danger of volatility in the exchange rate.
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First Published: Mon, July 29 2019. 22:10 IST