Govt Not Planning Capital Controls: FM

Mumbai: Following are highlights of comments made by P Chidambaram, Finance Minister at functions in the United States on Thursday.

The stock market has fallen in volatile trade over the past two days and the rupee has weakened since the Securities and Exchange Board of India (SEBI) proposed curbs on participatory notes, an investment instrument used by unregistered foreign investors .

Chidambaram explained the motives behind the proposals in two events in the United States late on Thursday. Following are excerpts of what he said.

On managing inflows:

"Let me assure you that we have no intention of imposing controls on capital flows, nor do we intend to keep out certain kinds of funds".

"Developed countries have injected a considerable amount of liquidity into their own markets to overcome their own problems. Part of that liquidity has spilled into India and some other countries. It has therefore become necessary to take some measures t o moderate the flow of funds into India. That was the primary purpose behind the measures announced by the SEBI yesterday."

"We are trying to ward off a bubble in the stock market. It is not often that the index rises from 18,000 to 19,000 in four trading sessions."

On SEBI proposals and measures on external borrowings:

"Besides these there is no measure under contemplation."

On the rupee:

"The rupee has appreciated rapidly since January 2007, nearly 12 per cent. There are one or two economies where the currency has appreciated rapidly. "We have a large exporter base, our foreign exchange earnings through exports are significant and export ers would like a competitive exchange rate. They can adjust to depreciation of the rupee, if it takes place over a period of time."

"The goal is to maintain a competitive exchange rate, without hurting foreign investments in India. As I said 2-3 days ago, the very rapid appreciation of the rupee has put the exchange rate just outside the comfort zone. This is an entirely new situatio n for us and I think we will gain mastery over the situation."

On share market:

"The stock market recovered sharply and splendidly by the end of the day. This was on the 17th of October. The market ended being down by only about 350 points."

"On the 18th of October, in the first session, the market rose 400 points. In the afternoon, there was a motivated rumour in the Bombay broker circles."

"We are not selecting any level for the market or any level for the rupee. What we are trying to do is to manage a new situation in order to balance the interest of different stakeholders and different players in the economy. The market will find its lev el, rupee will find its level."

On FII registration:

"I think registering has become easier since 2003-04. If there are still some niggling problems, which inhibit investors, I am willing to ask the SEBI to take a look at those conditions".

"I am also willing to ask SEBI to call a meeting of potential investors and discuss with them what can be done to make registration easier and simpler."

"I will certainly advise the SEBI to find ways and means by which you can register directly as an FII. I will be extremely happy if you can register directly as an FII rather than channelise investments through brokers in the form of notes."