Re: [IAC#RG] Indian investment in US Bonds

Thanks Sarbajit. The money could be used to retire government debt on which much higher rates are being paid. Does it make sense if you owe 80 billion dollars (the approximate amount of the government debt besides NRI deposits of 100 billion dollars) and are paying about 6% interest, to deposit 73 billion dollars in US treasuries which yield less that 2% interest. The NRI deposit scheme needs to be revised and rates lowered as well as interest taxed. If I as a resident Indian am being paid the same interest and taxed, I do not see why NRIs should not be taxed. In fact they should volunteer to pay tax since voting rights are also being given. Pavan Nair

On Thu, Aug 21, 2014 at 8:31 AM, Sarbajit Roy <sroy.mb@gmail.com> wrote:

Dear Pavan

I have no inputs on this. Since 2010 the IN Rupee has depreciated by
35% against major currencies. INR has been the worst performing major
currency. RBI has probably prudently moved our FOREX reserves into the
safest place it can find :-)

NRI's being NRIs, GoI can probably refuse to pay them when the shit
hits the fan.

Sarbajit

On 8/19/14, pavan nair <pavannair1@gmail.com> wrote:
> Dear Sarbajit,
>
>      I came across a report in the Economic Times of today regarding the
> subject. Here is the link.
>
> http://economictimes.indiatimes.com/news/economy/finance/india-among-top-16-lenders-to-us-as-bond-investments-hit-73-billion-in-june/articleshow/40382761.cms
>
> 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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