India needs to worry about short-term debt flows: US economist

India has been prudent in moving gradually when liberalising capital account, says Eichengreen

Barry Eichengreen, professor of economics and political science at the University of California, Berkeley, has termed the gradual capital liberalisation of India as “prudent”, but stressed the country needs to keep an eye on the external commercial borrowings that are increasing at a fast pace.

“India has been prudent in moving gradually and incrementally when liberalising the capital account in the course of the last 25 years,” Eichengreen said, delivering Exim Bank’s 32nd Commencement Day Annual Lecture.

India, he said, started with a policy towards FDI inflows, followed by a policy towards portfolio equity inflows and then debt inflows, and