Mumbai: India should to open its economy to foreign investment to finance its growth rather than restrict flows of capital into the country, US treasury secretary Henry Paulson said.

"Administrative restrictions of capital flows are blunt instruments and can have unintended consequences," Paulson said in prepared remarks made at the Council on Foreign Relations ahead of an India trip.

He said such measures tend to inhibit efficiency but lose their effectiveness over time, adding, he wants India to continue liberalising rather than restricting capital flows.