Govt says has tools to manage heavy inflows

By Manoj Kumar and Rajesh Kumar Singh

NEW DELHI (Reuters) - The government has the tools to deal with an influx of foreign capital inflows if they become disruptive, but they are not a concern yet, Finance Minister Pranab Mukherjee said on Wednesday.

With Western economies still crawling out of recession and interest rates at or near historic lows, funds have been flooding into faster-growing emerging markets, prompting some, including Brazil and Taiwan, to impose controls.

Indian officials had said on recent occasions that they welcomed fund inflows, but Mukherjee on Wednesday also noted that India is ready to deal with the flows if they become a problem.

"It is not a matter of concern as we have the system of monitoring," he told reporters.

"And whenever we will find that there are some distortion, then we will have the arrangement to counteract it," he said on the sidelines of an event, without elaborating.

"Therefore, it would not be disturbing," Mukherjee added.

Inflows from abroad have been instrumental in driving up stock and property prices and prompting some Asian central banks, including the Reserve Bank of India (RBI), to adopt measures to curb a surge in real estate prices.

Foreign investors have bought more than $15 billion of local equities in 2009, after selling $13 billion in 2008, helping send Indian stocks more than 75 percent higher.