Re: [IAC#RG] Indian investment in US Bonds

Dear pavan

Supratim has raised "human psychology".

NRIs are investing in Indian FDs because (a) they are getting good
sovereign returns @ 6% in their own currency. RBI and banks don't know
what to do with this flood of money so they are having to invest it in
US T-bonds to hedge against currency risk. Real estate and gold are
down-trending in India, so what is the RBI to do, stop NRI deposits ??

https://finance.yahoo.com/echarts?s=^NSEI+Interactive#symbol=^nsei;range=1y;compare=^dji+^nya;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=;

Follow this link and all will be clear :-)

Sarbajit

On 8/28/14, pavan nair <pavannair1@gmail.com> wrote:
> Dear Shri Supratim Basu,
> I do feel that just as war is too important a subject to be left to
> the generals, the state of the economy must not be left to economists!
> Recall 2008. The question raised is not why we are investing in US Bonds
> but where is the need to hike this investment year after year. The amount
> invested was hiked by 19% in FY 13-14 to 73 billion dollars. Please read
> the article in the Economic Times. My argument is that this has been
> possible due to a surge in NRI deposits over the last few years. A back of
> the envelope calculation shows that the recurring loss per year on account
> of differential interest rates is Rs 4,800 crores on the incremental amount
> invested in FY13-14 (about 10 billion dollars). If we had not accepted an
> additional 10 billion dollars and not invested them in US Bonds, the
> exchequer would have gained by the mentioned amount. That is how I look at
> it as a layman. An economist's view may be different. Incidentally, I wrote
> a letter to the ET on the lines above which was published in the print
> editions the next day. I do hope you will see some merit in my argument. I
> feel there should be a moratorium on NRI deposits and further investment in
> US bonds till a white paper is published by the government as suggested by
> Shri Sant Mathur. I do endorse your view that economics should be included
> at the secondary level. Thank You. Pavan Nair
>
>