India has raised the ceiling on foreign institutional investment in government and corporate bonds by $5 billion each, a finance ministry official said on Thursday, to help boost foreign inflows after the existing limits were almost reached.
"The policy has been reviewed in the context of India's evolving macroeconomic situation, the need for enhancing capital flows and making available additional financial resources for India's corporate sector," Thomas Mathew, joint secretary in the finance ministry, told reporters.
The move could also help ease the pressure on the rupee, which has slumped nearly 13.5 percent from its year-high in July. Investments by companies in India have shrunk after the central bank raised interest rates 13 times since early 2010, and consumer spending has dropped hurting growth.
The slowdown has dented government revenue collections and New Delhi has stepped up its borrowing, putting upward pressure on bond yields and the availability of cash for the corporate sector. The limit on foreign institutional investor (FII) investment in government bonds has been raised to $15 billion from $10 billion, which has almost been reached, Mathew said.
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