Budget 2012: Relaxation of ECB norms to benefit select sectors

NEW DELHI: The government could raise the external commercial borrowing (ECB) limit marginally to accommodate the special window it has created in the budget for select sectors.

The budget has allowed $1-billion ECB for the airline industry for one year, permitted such borrowings for capital expenditure on the maintenance and operations of toll systems for roads and highways and allowed foreign debt to part-finance rupee debt taken by power companies and also for affordable housing.

The government hopes this increase in ECBs limit will allow some of the stressed sectors to raise cheaper funds overseas at a time interest rates remain high in the domestic market.

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"We may increase the external commercial borrowing limit marginally to accommodate these extra windows we have opened," a senior finance ministry official told ET. However, the limit may not be expanded significantly from the current level given the concern over the mounting foreign debt. The Economic Survey 2011-12 has also sounded caution on ECBs.