NBER Working Papers and Publications
|May 2007||India's Experience with Capital Flows: The Elusive Quest for a Sustainable Current Account Deficit|
with Ajay Shah
in Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, Sebastian Edwards, editor
|May 2005||India's Experience with Capital Flows: The Elusive Quest for a Sustainable Current Account Deficit|
with Ajay Shah: 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 ...