Dear Sarbajit,
I came across a report in the Economic Times of today regarding the subject. Here is the link.
I find it inexplicable that we have been borrowing money from NRIs at rates OF up to 9% per annum for NRO/NRE accounts and lending money to the US government in the form of US treasuries at very low rates of about 2%. The lending to the US has increased by 19% in the last financial year. The external debt stands at 440.6 billion dollars as on 31 March 2014 and has risen substantially primarily on account of increased NRI investment which stands at 103.8 billion dollars. The reserves are at about 320 billion dollars which includes the NRI borrowing. This amounts to a loss of taxpayer money since we need to buy dollars at existing market rates to payout the interest to NRIs. There seems to be an arrangement with the US government in return for something unknown, otherwise why should a poor and indebted country like India lend more to the US than developed countries like France, Canada and Germany. We need to retire debt so that debt servicing which is at about 25 billion dollars per annum can be reduced. May I request you and through you, other members of the list for their views as also what action can be taken. Has the Governor RBI got the authority to invest or is it a Cabinet decision. Regards. Pavan Nair
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