Mumbai, Jul 25 (IANS): The Union government's foreign currency (FCY) sovereign bond issuance needs greater macroeconomic prudence, a Kotak report said on Thursday.

Kotak said that "the government's proposed foreign currency sovereign bond issuance will warrant greater macroeconomic prudence in the light of high extent of foreign ownership in Indian debt and equity".

"We are not sure of the requirement for FCY sovereign bonds at the current juncture. We believe that better fiscal management and focus on economic reforms will result in higher domestic savings, which will obviate the need for FCY sovereign debt," said the report.

Kotak said India has a high dependence on foreign equity capital: US$433 bn in FPI equity (46.1 per cent of the free-float market cap. of BSE-200) and US$325 bn in FDI equity (cumulative net inflows from FY2000 excluding valuation effects).

"In comparison, foreign debt of US $309 bn in Indian companies and US$ 104 bn for the government seems low. While attracting foreign savings into debt is essential, it should not be based on a short-term view of current low interest rates while internalizing FX risks," it added.