A+| A| A-

ASSAM-University of Discord

only adding to domestic liquidity. Up to January 21, broad money had expanded by almost 15 per cent in the current year against 13 per cent during the corresponding period last year. This rise is essentially attributable to the substantial increase in the net foreign exchange assets of the banking sector. Third, the flow of foreign exchange unrelated to exports or to services earnings may make the rupee appreciate against the dollar and thus provide an artificial boost to the rupee's strength. It is a queer situation where the external sector remains fundamentally in disequilibrium but the currency gains strength and remains undervalued only because of central bank intervention, finally, a part of the funds flowing in through the GO Rs or foreign equity issues represents a reverse flow of the earlier illegal capital flights. The process implies not an unrequited return flow of funds hut an addition to the country's international liabilities position and a recur ring liability on such foreign debt or investments. In other words, the industrialists who had stashed away funds abroad are now able to convert these into claims on Indian companies and enjoy regular incomes on these claims, thus enabling them to build up further assets abroad. It is very likely that the outflows on these accounts will soon exceed the initial inflows.

To read the full text Login

Get instant access

New 3 Month Subscription
to Digital Archives at

₹826for India

$50for overseas users

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

EPW hopes the list is complete and apologises if the name of any referee has been excluded. Errors will be corrected on the web site.

NEGOTIATIONS arc under way between some leading units in the soap industry, the Government of India and an American firm, Atlantic Richfield, for...

The proposal for addressing the twin problems of fl oods and water scarcity by interlinking rivers is based on an outdated and dangerous idea of...

The idea of a national interlinking of rivers needs to base itself on the past six decades' experience of river and fl ood control measures. A...

The Supreme Court's verdict directing the Government of India to implement the interlinking of rivers seems to have overlooked the regional and...

Kalyan Sanyal was trained as a trade theorist in the mid-1970s and initially made many signifi cant contributions in the fi eld. But he later...

Kalyan Sanyal's magnum opus, Rethinking Capitalist Development, can be seen as a contribution to the project of reimagining political economy in a...

The Government of India, acting through the human resource development ministry, is actively considering a series of drastic changes to the...

Looking ahead, the big macroeconomic policy question for India is whether or not it should emphasise greater self-insurance with a necessarily...

Back to Top