In line with Planning Commission's thinking, the Reserve Bank of India said on Wednesday that it was not opposed to the idea of utilising the burgeoning foreign exchange reserves for infrastructure development, but the government should be cautious while doing so.
"We should recognise the importance of infrastructure in the country's development. The overall investment activity has to pick up and that has been our stance. We have comfortable liquidity and forex reserves," RBI Governor Y V Reddy told reporters in New Delhi.
"Whatever way infrastructure has to be financed, we should explore all avenues and that would help," he said, adding the proposal should be "seriously" considered.
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Asking the government to come out with detailed plans on how it proposes to utilise the forex reserves, which currently stand at over $120 billion, for infrastructure development, Reddy said there were several aspects, which needed to be looked into. He said the possible direct and indirect impact on the fiscal and monetary conditions, including financial stability, should be taken care of.
"It is also necessary and admittedly essential that in the current domestic financial market situation, all these proposals should be managed in a transparent way, taking into account the balance sheet considerations," he said.
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