Capital flows faster than expected, says FinMin official

Capital flows are coming into India at a faster pace than expected, and in such a situation, liberalising the use of funds raised in the overseas market becomes a challenge, said C S Mohapatra, director, capital markets department of the finance ministry.

“Inflows are coming back to India and they are coming at a much faster pace compared to the expectation of the government or the market,” he said. On whether rising capital flows were a concern, and would the government consider some curbs on portfolio investments, Mohapatra refrained from comment.

He, however, said the capital flows would be managed efficiently. Analysts and market players have pointed out the challenges the government and Reserve Bank of India (RBI) will face in the wake of rising capital inflows into India, as global investors seek high yielding assets.

The RBI top brass has also, time and again, said there was a risk of capital flows rising sharply going forward.

But, capital inflows were not a big concern currently, as they were commensurate with the current account deficit, RBI had said.