Former RBI Governor Bimal Jalan has said that the government must borrow only long-term fund from the external market, and the quantum should not exceed 1.5 percent of Gross domestic product (GDP) under any circumstances. Jalan said that he does not have negative view about overseas sovereign borrowing, but he thinks India does not need to borrow from abroad.
He also stated that the panel on Reserve Bank of India's (RBI) economic capital framework will meet again to finalise its report to decide appropriate capital reserves for the central bank. He also said that while deciding the appropriate capital reserves for the RBI, the resources and the risk factors are going to be taken into account.
Former RBI Governor further said that the government will soon initiate the process of gross borrowing programme from external markets in foreign currencies in the second half of current fiscal (H2FY20), in a move that will ease pressure on local markets. He noted that India's sovereign external debt-to-GDP ratio remains among the lowest globally at less than 5 percent.