Liberalizing Capital Flows in India Financial Repression…放宽印度资本流动金融抑制.pdfVIP

K E N N E T H M . K L E T Z E R Liberalizing Capital Flows in India: Financial Repression, Macroeconomic Policy, and Gradual Reforms After decades of resistance to international economic integration, India has recently made significant progress in liberalizing trade and access to foreign investment, beginning in 1993. These policy changes reflect widespread concern that India’s past inward orientation inhibited eco- nomic growth, especially in comparison with the developing countries of East Asia. The acceptance of economic liberalization and reform has allowed the relaxation of restrictions on foreign direct investment and inward portfolio capital flows. India retains tight controls on outward port- folio capital flows, restricting the access of residents to foreign capital markets and domestic markets in foreign currency-denominated securi- ties. The relaxation of these controls and further liberalization of the cap- ital account remain controversial policy issues for India. The round of economic reforms in response to the balance of payments crisis in 1991 led to the publication of the Report of the Committee on Cap- ital Account Convertibility (the Tarapore Report) in 1997.1 This report, published by India’s central bank, the Reserve Bank of India, outlined a plan for achieving full capital account convertibility. Ironically, the Tara- pore Report appeared on the eve of the East Asian financial crises. It is not surprising that the absence of contagion effects on the Indian economy dur- ing these crises was taken as affirmation of the wisdom of India’s controls on outward capital flows. Although capital account convertibility in devel- oping countries became more controversial in the wake of the