FII inflows under check: FM

New Delhi, Nov. 18: The Union finance minister, Mr Pranab Mukherjee, said on Wednesday that the government has the tools to monitor the influx of foreign capital inflows and will act if they become disruptive.

“FII (foreign institutional investors) inflows is not a matter of concern. We have a system of monitoring. Whenever, we find that there are some distortions, we have the arrangement to counter them. Therefore, it is not disturbing,” said Mr Mukherjee.

The finance minister also said that the country will have to import rice during the 2009-10 marketing season (October-September) despite surplus to meet the shortfall in kharif crops.

The industry chamber Assocham on Tuesday had demanded two per cent tax on the investment from the foreign institutional investors to prevent creation of any bubble in the Indian stock exchanges.

The industry chamber had said that the tax should be there till countries from where money is flowing into India start withdrawing their stimulus packages and hike interest rates from the current zero per cent.

Brazil has already imposed a tax on foreign inflows to prevent any over heating of its bourses.

The Sensex has touched the 17,000 mark in November from its lows of 8,000 in March due to record investment by the foreign institutional investors.

They have put in over Rs 71,900 crore so far this year in the country’s bourses, the highest ever investment made in rupee terms in a single year. The huge inflow has led to appreciation of the rupee, which threatens to impact the competitiveness of exports. India’s exports had fallen by 11.4 per cent in October.

The Assocham said that to encourage productive foreign money into the country the government should consider reviving the foreign direct investment (FDI) caps on different sectors than to allow hot money from developed countries where currently the interest rates are near zero.