Sir please explain this in next video government has announced a plan to check “non-essential imports”, boost exports and initiated five measures to attract dollar inflows into the country to trim the widening current account deficit that is seen as a factor behind the rupee’s sharp slide against the dollar. The five measures include: Mandatory hedging conditions for infrastructure loans through the external commercial borrowing (ECB) route will be reviewed.20 percent exposure limits of foreign portfolio investors’ corporate bond portfolio to a single corporate group, company and related entities will be removed, and 50 percent of any issue of corporate bonds will be reviewed.Manufacturing sector entities will be permitted to avail external commercial borrowings up to $50 million with a minimum maturity of one year instead of the earlier period of three years.Masala Bond issues done in the current financial year will be exempted from withholding tax.Restrictions on Indian banks’ market making in Masala Bonds, including restrictions on underwriting of such bonds, will be removed.
Brother all of the five steps are only to increase the dollar inflow into the indian economy so that we phase past random fluctuations. If i will try to explain you some - 1. Like in the first case, hedging was mandatory. So it will be reviewed. Hedging is like making investment against the one initial investment to offset any absurd price movement. So these conditions make it difficult to raise loans for indian borrowers. So govt is ready to let it go to bring in dollars
2. The FPI from abroad could only invest in a corporate only upto 20 percent, this is being waived off so that more dollars can come in easily. I hope you got the gist and the other measures work in similar way
