Transparency, not capital controls needed: Pranab
18 Feb 2011
The global financial system should move towards a more transparent regime while the issue of capital controls should be left to individual countries to decide, India told the opening session of the Group of 20 finance ministers and central bank heads in Paris today.
Addressing reporters on the sidelines of the G20 forum, India's finance minister Pranab Mukherjee said while it was up to individual countries to manage inflows of foreign capital, counties should cooperate in tackling issues like black money as also the rising prices of energy and food.
"Our position is that we do not want any arbitrary mechanism to discourage capital inflows. We have stated that this decision should be left to the discretion of individual countries," Mukherjee said.
India is facing a peculiar situation where the economy needs foreign capital to bridge its widening current account deficit while the country's high networth individuals continue to stash away unaccounted money in tax havens overseas.
India, Asia's third-largest economy after China and Japan, is nursing a widening current account deficit, expected to be around 3 per cent of GDP in the current fiscal ending 31 March 2011.
Policymakers, however, are confident India can easily finance the gap.
