Radhika Pandey, Rajeswari Sengupta, Aatmin Shah, Bhargavi Zaveri
In this paper, we trace the evolution of capital controls on foreign institutional investment in India, by hand constructing a a dataset of legal interventions with respect to foreign institutional investment in India. We classify interventions into different categories depending on whether they pertain to procedural or substantive measures (such as investment limit or conditions), and also classify them depending on the asset class that they affect. We assign scores to each intervention depending on whether it restricts or liberalises the regime governing foreign institutional investment in India. The dataset can be used to understand the manner in and extent to which, India’s capital account has gradually opened up since the economic liberalisation reforms of the mid 1990s and the circumstances in which these interventions were made. It can also throw insights on the impact of different legal interventions with respect to foreign institutional investment on outcomes such as foreign investment inflows into India, currency volatility, credit growth and stock market returns.