In order to enhance FII inflow in Government’s debt, India is considering simplifying the allocations of government debt limits to foreign investors, including the current system of auctions. As the FII’s sell off has been a key reason behind the slump in the rupee to record lows this week, the government is likely to take measures to alter the foreign funds, which have sold over $3.2 billion in government debt for over 14 successive sessions.
Government is expected to make the debt limits available on a first come, first serve basis for foreign investors, instead of the current system of selling them at monthly auctions. Further, to attract foreign investors into debt, the government has taken a slew of measures this year, including cutting taxes on interest income and raising the amount of debt they can buy. Meanwhile, India has already shifted to a first come first serve basis of selling corporate debt limits earlier this year.
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