Govt plans to relax ECB norms for infra investment

MUMBAI: The government is looking at relaxing the external commercial borrowing (ECB) norms, especially for increasing investment in infrastructure, a top official has said.

"ECB norms will be relaxed...but when we do it I cannot say...the norms for infrastructure sector will be relaxed at the earliest," Finance Secretary D Subbarao told reporters on the sidelines of US-India CEO Forum.

He, however said, the rollback on current restrictions on raising funds overseas through ECB will be only after the capital inflows reach a comfortable level.

There is a huge gap between the capital flows, which are around 5 per cent of GDP and the current account deficit is nearly 1.5 per cent of GDP, he said.

Banking regulator Reserve Bank had imposed restrictions on raising foreign funds by Indian companies overseas to check capital inflows which result in inflationary pressures domestically.

On the use of RBI's forex reserves for infrastructure development, Subbarao said the government and RBI still have to develop a consensus over the issue.

Earlier in the day Finance Minister Chidambaram said at the Forum that the country needed to raise investment in infrastructure from the current level of five per cent of GDP to nine per cent of GDP over the next five years.