Capital Account Management in India

Abhijit Sen Gupta, Rajeswari Sengupta

India has been subject to capricious capital flows since its integration with the global capital markets in the early 1990s. In a bid to balance diverse objectives, India, like many other emerging markets, has resorted to active management of various types of capital flows. We find in this paper that the calibrated liberalisation approach resulted in altering the composition of capital flows towards more stable flows, and has helped India to negotiate the “Trilemma". However, the use of sporadic capital account management measures in the face of surge or stop episodes of capital flows has not been effective in achieving the objectives of reducing external vulnerability or mitigating macro-prudential risks.

Citation: Capital Account Management in India, Abhijit Sen Gupta, Rajeswari Sengupta, Economic & Political Weekly, Volume 51, Issue No. 12, March 2016.