India To Use Forex Reserves For Infrastructure Development
The finance minister P Chidambaram, has said that the government will soon start using India's foreign exchange reserves, to improve the infrastructure in the country.
A separate company - SPV (Special Purpose Vehicle) would be created within the next three months.
The SPV would borrow foreign exchange from the RBI and use these forex reserves to finance external commercial borrowings (ECBs) for import of machinery by Indian firms.
He added that as the reserves would be spent outside India, to buy capital goods, there would be no pressure on local inflation.
It is estimated that India needs around a $320 billion investment in infrastructure in next few years. Currently India has around $210 billion in forex reserves.
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