ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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So What Else Is New

ADDRESSING the consultative committee of parliament attached to his ministry last month, finance minister Manmohan Singh once again drew attention to the country' s "very strong" balance of payments position, with foreign exchange reserves now exceeding $17 billion, and reiterated that the rise in reserves had not been the result of inflows of volatile foreign capital or an increase in external debt. Interestingly, precisely because of the apparent improvement in the balance of payments and the impressive level of the government's foreign exchange assets, the country's commercial borrowings have also begun to go up once again and, what is most relevant, much of such borrowing is evidently for relatively short periods of two and three years. Certainly, the situation today is vastly different from what it was in 1990-91, but it still bears remembering that the servicing commitments on very short-term commercial loans, allowed to be raised with thoughtless abandon in the last years of Rajiv Gandhi's government, had been a decisive factor in the payments crisis which then drove the country to the portals of the IMF From a level of $ 2,2 billion in 1990-91, net commercial borrowing had dropped to a negative figure of $ 451 million in 1992-93. But with the Indian economy securely under Fund-Bank tutelage and the government's growing foreign exchange kitty, the multinational banks are once more licking their chops and getting into position to grab their share of some easy pickings. And so India's net commercial borrowings, which are estimated to have picked up to the level of $ 625 million in 1993-94, are officially expected to more than double this year. In 1993-94 the limit of $ 2.5 billion which the government had set for approval of commercial loan proposals for the year was fully used up and it has to be seen whether combined pressure from international lenders and intending Indian borrowers will persuade the government to relax the ceiling, set at the same figure, for the current year.

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