Rbi Deputy Governor Allays Fears Of Capital Flight

Fears of capital flight from the country through present trade transactions are unfounded, said Y V Reddy, deputy governor, Reserve Bank of India (RBI).

Speaking on the topic of capital flight at the Centre for Economic and Social Studies in Hyderabad, Reddy emphasised that there was no reliable basis for suspecting capital flight through trade transactions as of the present.

Reddy, however, cautioned against granting concessions like guarantees to foreign companies while not granting the same to domestic corporates as done by some developing countries. He said this could encourage domestic capital to leave the system and return masquerading as foreign investment.

 

There is now evidence of the occurrence of reverse capital flow as no large capital outflows