Commentary: The temptations of India's currency stockpile (Bloomberg News via IHT)

The central govt and the RBI are fighting over control of India's $120 billion foreign currency reserves. The RBI has formal ownership but the govt wants to use part of the reserves for its domestic agenda.

The RBI is warning that any reduction in these reserves will be viewed negatively by the international financial markets but the Planning Commission is recommending that $5 billion of the central bank's reserves be spent annually in the next three years on extra investments in infrastructure. The govt's argument is that this improvement in the basics will invite more foreign investment which will more than offset the amount spent.