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Operationalising Capital Account Liberalisation: The Indian Experience
Author(s) -
Reddy Y. V.
Publication year - 2001
Publication title -
development policy review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.671
H-Index - 61
eISSN - 1467-7679
pISSN - 0950-6764
DOI - 10.1111/1467-7679.00125
Subject(s) - liberalization , gradualism , economics , debt , capital (architecture) , stress (linguistics) , capital account , international economics , capital flows , current account , monetary economics , macroeconomics , economic system , business , market economy , archaeology , history , paleontology , linguistics , philosophy , biology , exchange rate
Although influenced by particular contextual factors that may not be capable of being generalised, the Indian experience of capital account liberalisation tends to vindicate a process approach, with the emphasis on caution and gradualism. This article explains the policy framework that governed liberalisation in the 1990s, and describes the current framework of controls; various facets of the Indian approach to managing the capital account; and current thinking on appropriate further steps. To date, the accent has been on progressively replacing administrative controls with prudential limits on transactions, these norms being guided by the country's absorptive capacities and financing needs, and by the need to achieve a mix of short‐term and long‐term, debt and non‐debt, and stable and volatile flows.