NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Ajay Shah

Ministry of Finance, New Dehli

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NBER Working Papers and Publications

May 2007India's Experience with Capital Flows: The Elusive Quest for a Sustainable Current Account Deficit
with Ila Patnaik
in Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, Sebastian Edwards, editor
May 2005India's Experience with Capital Flows: The Elusive Quest for a Sustainable Current Account Deficit
with Ila Patnaik: w11387
From the early 1990s onwards, India has engaged in policies involving trade liberalisation, strong controls on debt flows, and encouragement for portfolio flows and FDI, under a pegged exchange rate regime. Domestic institutional factors have led to relatively little FDI and substantial portfolio flows. There has been significant tension between capital flows and the currency regime. Many tactical details of the intricate reforms to the capital controls derive from the interlocking relationships between monetary policy, the currency regime and capital flows. In the recent period, pegging has given a capital outflow through reserves accumulation which was larger than the substantial net private capital inflows. In March 2004, difficulties of pegging appear to have led to a near-tripling of ...

Published: India's Experience with Capital Flows: The Elusive Quest for a Sustainable Current Account Deficit, Ajay Shah, Ila Patnaik. in Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, Edwards. 2007

 
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