The finance ministry of Indian government recently said all options, including a sovereign bond issue, to support the rupee were on the table; but economists are of the view that raising funds from non-resident Indians (NRIs) through debt or deposits would be a better option than issuing a sovereign bond.

Philip McNicholas, a Hong Kong-based economist with BNP Paribas, said that the cost of borrowing from NRIs would be lower than onshore; though he admitted that the government might not be able to get terms as favorable as it might want.

McNicholas added that an NRI bond issue would ensure a quick and easy way to raise much-needed dollars.

Commenting on the Indian government's plans to raise dollars, he said, "The government may not get terms as favorable as they might like but the cost of borrowing would be lower than onshore, and that's an incentive."

As per economists' average estimate, the government must pay an interest of between 5 per cent and 6 per cent on dollar deposits for a period of five years to lure NRIs to deposit their dollars in Indian banks.

The government has been struggling to attract dollars into India, in a bid to support its weakening currency.  Earlier this month, the rupee fell to its all-time low of 61.21 per dollar.