FDI More Dependable than FII: Raghuram Rajan

Bangalore: The Chief Economic Adviser Raghuram Govind Rajan said the government should focus on Foreign Direct Investment (FDI) and open more sectors to such inflows; cautioning against the over-dependence on Foreign Institutional Investors (FIIs). The economic adviser  was responding to the latest reform initiatives taken by the government in the last couple of weeks.

During his first interacting with media after assuming the charge as the chief economic adviser, Rajan said it is an environment when the external investors are inconsistent. Rajan appeared to be in full support for FDI, since they are long-term investments. According to him, financing through FDI is safer for our country and more sectors should be open to it, since it will enhance efficiency and competition in the local market and thus in local economy.

It will be safer if the overall spending is reduced, including fiscal deficit, thus the moves to narrow down the fiscal deficit, by the reduction of subsidies is what important for the country, he added. In 2011-12, the Current Account Deficit (CAD) had touched a record height of 4.2 percent. And in the last fiscal, the fiscal deficit, the gap between expenditure and revenue, was 5.76 percent of GDP and the government is aiming at bringing it down to 5.1 percent in the current fiscal.