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Politically correct about debt

The door is slowly opening on India's debt markets. Foreign investors can now invest 100% of their Indian portfolios in corporate debt as against the 30% allowed previously. The market itself is booming with long-term debt worth rs55 billion ($1.54 billion) raised by Indian corporates in the past few months and fixed-income returns overtaking those of equities.

The excitement in the corporate sector has set analysts wondering whether India's government bond market - accounting for 60% of total issuance - could also be ripe for reform. But India's finance minster p Chidambaram is cautious about this prospect.

"It's a suggestion and as we say in parliament it's a suggestion for action. We have to consider it before we take a decision. No decision has been taken yet," he said during a visit to London in September.

He added: "Initially we allowed fiis [foreign institutional investors] to invest up to 30% in debt instruments. We have now increased this to 100% in debt instruments [excluding government bonds]. Let's see how this works. Let's see the flow of funds. One step at a time is what is politically correct in India today."