India To Focus On Capital Flight At G-20 Meet

The G-20 meeting of finance ministers and central bankers in November in New Delhi has become important for India in the context of the increasing role for foreign institutional investors in the domestic market.

India has been arguing for a greater proactive role of the international financial institutions to protect countries opening up their economies against the vagaries of international finances. The finance ministry is expected to ask the forum that will bring together 20 most important economies of the world in New Delhi, to take steps to prevent the sort of crisis that has been hitting the world in the nineties, including the east Asian crises that had led to a large scale flight of capital from these countries.

With the changes introduced in the domestic capital markets, the role of FIIs have become extremely important.

Policy-makers are keen that this dominance should not lead to a tendency towards a flight of capital at the slightest hint of disturbances.

While G-20 does not have any institutional decision-making powers, it will also not be responsible as a group for executing any policy decisions, its importance lies in