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Acknowledgement

This work on An Assessment of India’s Capital Account in the Balance of Payments during

1990-2013 is part of the requirement of our MA/M.Sc degree in Economics of the University of

Kalyani. While doing this secondary data based project work we have gathered some

knowledge regarding external dimensions of the present Indian economy and also, we have

acquired some data analysis skill although we have used very simple method of analyzing

relevant secondary data for our purpose.

Firstly, we remain grateful to our supervisor of this project work Dr. Byasdeb Dasgupta of

Department of Economics of the University of Kalyani as without his active help and

intellectual guidance this work would not perhaps see the light of the day. The entire inspiration

of doing our project work on this topic came from him.

We are also grateful to all the faculty members of the Department of Economics of University

of Kalyani including our Head of the Department Sri Supriyo Bhattacharya who taught us the

basics of the subject called Economics during 2012-14. They also gave us necessary

encouragement while we remained busy doing our work on this project.

We also heartily thank all the non-teaching staff members of the Department of Economics,

who acted actually as our elder brothers during our two-Year stay in this Department. They

(Rajuda, Diwakarda, Ashishda and Ranjitda) always extended their help whenever it was

required.

Finally, we thank all our friends who also studied with us during 2012-14 to pursue their

MA/M.Sc degree in Economics. Their active participation with us helped a lot to finalize this

project work. We also thank our junior brothers and sisters in the Department who will also

have to do this kind of project work next Year. They always remained friendly and cooperative

with us during our one-Year interaction with them in this University.

At the end, we must confess that we remain solely responsible for any error and omission, if

any, in this project work.

(Anustup Kundu)

(Saheli Saha)

(Samarpita Pal) Dated 18th June 2014

(Tapas Adhikary) Place: Kalyani

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CONTENTS

Page Number

1. Introduction - 3

2. Section 1: Degree of Openness of Indian Economy - 4

During 1990-2013

3. Section 2: FDI Flows to India during the - 8

Post liberalization period

4. Section 3: Foreign Direct Investment Flows from

India - 9

5. Section 4: Foreign Portfolio Investment in India

During the post-liberalization period - 10

6. Section 5: External Loan of India during the

post-liberalization period - 13

7. Section 6: Foreign Exchange Reserves of India

during the post-liberalization period - 20

8. Section 7: Overall Capital Account Balance of India

during the post-liberalization period - 22

9. Conclusion - 25

10. References - 27

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An Assessment of India’s Capital Account in the Balance of Payments

During 1990-2013

Introduction:

This work is on examining the India’s capital account in the balance of payments

during the post-liberalization era. The neoliberal era which started in India since June

1991 is based on the premises of liberalization, privatization and globalization. In

short, this is popularly known as the LPG regime. The liberalization signifies a free-

market driven economy where the market is liberalized from the shackles of state-

control, intervention and regulations along with non-participation of the state in the

direct productive activities which characterizes the planning era of Indian economy

(1951-91). The basic idea of liberalization is that the economy should be based on free

market-driven principles with the state facilitating the growth and expansion of this

free market within the national boundary and also, outside the national boundary.

Since liberalization calls for non-participation of the state in the direct productive

activities privatization became one of the main guiding principles of neoliberal era in

India economy in the form of disinvestment of Public Sector Enterprises (PSEs)

mostly. There are some instances of outright sale or privatization of PSEs to the

private entrepreneurs. Lastly, the word globalization goes hand in hand with the basic

premises of liberalization which calls for free functioning of market cutting across

national boundaries. In this backdrop, globalization in a very narrow sense stands for

integration of the national economy with the world or global economy in which global

capital and global corporate firms will play the key role. This integration with the

global economy can take place (a) through the international trade route by trade

liberalization implying lifting of all restrictions on imports and emphasizing on export

promotion (which in other words implies production not only for the domestic

economy but also for the global economy at large); and (b) through the global

financial capital flows route which can take place in terms of (i) foreign direct

investment (FDI) flows and (ii) foreign portfolio investment (FPI) flows.

The basic objective of the present work is to examine the India’s capital account

position in the post-liberalization period to identify whether there is Net transfer to

financial resources to India or not due to gradual opening up of the Indian economy or

not. Because the advocates of neoliberal policies hold that globalization by integrating

the Indian economy with the global economy sans much state control or regulation

would enhance economic growth and thereby, would lead to economic development at

a faster pace. However, the basic premise of this neoliberal logic is that opening up

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the Indian economy would ensure larger inflows of global capital in India and hence,

would raise the rate of investment and thereby, would increase growth. In this work

we want to see simply whether integrating the Indian economy at an increasing rate

has really remained successful in the post-liberalization period in enhancing Net

transfer of financial resources in the direction of India from the rest of the world or

not.

We have first attempted to measure the degree of openness of the Indian economy

over the Years in Section 1 of this paper. Subsequently, we have tried to calculate the

Net transfer of financial resources in the different heads of the capital account of

India’s balance of payments as reported by the Reserve Bank of India every Year.

Successive sections deal with this measurement of Net transfer of financial resources

to India under the different heads of the capital account of India’s balance of

payments. Lastly, we attempted here to provide an aggregative picture of the Net

transfer of financial resources to India in the overall capital account of India’s balance

of payments. The concluding section sums up the major findings of our work.

Section 1: Degree of Openness of Indian Economy during 1990-2013:

Traditionally the degree of openness (henceforth, DoO) of an economy is measured in terms of

international trade flows as percentage of overall GDP of the country as follows:

Degree of Openness (DoO) = (X+M)/GDP (1)

where X and M refer to total value of exports and imports of India at current prices and GDP

refers to the Gross Domestic Product of India at current market prices.1

However, in this work following Dasgupta (2013b) we have made an attempt to define

DoO both in terms of trade flows and in terms of global capital flows which include only FDI

and FPI flows. Hence, we rewrite equation (1) above as:

DoOFT = (X+M)/GDP (2)

Where DoOFT stands for degree of openness in terms of gross trade flows.

1 We admit that there is a limitation of this measurement as we have considered all the economic variables viz. exports, imports and GDP at their current market prices instead of considering them at constant prices or in real terms, which should be the standard way of measuring DoO because then the figures for different Years become comparable. However, due to paucity of time we could not do that. And we have tried to understand DoO of Indian economy over the Years since 1990-91 at the current market prices of each Year.

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Similarly, we define DoO in terms of global capital flows as:

DoOGC = (FDI+FPI)/GDP (3)

Where DoOGC stands for degree of openness in terms of global capital flows. Once again here

we have considered both FDI and FPI flows at their current market prices every Year.

Figure 1.1and Table 1.1 below depict the degree of openness of the Indian economy during the

post-liberalization period in terms of gross trade flows as defined in equation (2) above. As can

be seen from the Figure 1.1 (and also from Table 1.1) the DoOFT since 1990-91 has increased

manifold. In 1970-71 it was much less than 1% of GDP. In 1980-81 it increased to 2.47% of

GDP. And in 1990-91 when the LPG regime was about to begin it was 6.18% of GDP. Since

then it has increased at a galloping rate and in 2011-12 it was more than 75% of GDP of that

Year.

Table 1.1

Degree of Openness of Indian Economy in terms of Gross Trade Flows

(1970-71 to 2011-12)

Year

Degree of Openness of Indian Economy in terms of Gross Trade Flows (in

percent)

FIGURE 1.1

1970-71 0.49

1980-81 2.47

1990-91 6.18

1991-92 7.79

2000-01 17.74

2001-02 20.59

2002-03 23.43

2003-04 29.17

2004-05 34.45

2005-06 39.86

2006-07 43.09

2007-08 52.11

2008-09 50.02

2010-11 71.97

2011-12 76.51

Source: Database of Indian Economy as available at the RBI website www.rbi.org and accessed on 15th April 2014.

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The degree of openness in terms of global capital flows as measured following equation (3)

above is indicated in Table 1.2 and Figure 1.2 below. As can be seen from the figure there is a

steep rise in degree of openness in terms of global capital flows which is relatively more when

compared with the degree of openness of the Indian economy in terms of gross trade flows. In

fact, it rose from 0.16% of GDP in 1990-91 to 136.28% of GDP in 2011-12. As is well known

during the post-liberalization period most of the time FPI flows remained the dominant global

financial capital flows to India compared to FDI flows. In fact, in this respect there is a

difference with China. While China remained successful in attracting FDI flows mostly (and

that too, Greenfield investment in manufacturing sector) than FPI flows (as FPI flows to China

so far remained quite negligible compared to its FDI inflows), India remained one of the major

destinations of FPI inflows to her capital market since 1991 although of late there is substantial

rise in FDI inflows in India too. However, most of these FDI inflows to India were mergers and

acquisition (M&A) type than Greenfield investment and hence, we cannot say that with rising

FDI inflows India’s gross as well as Net national investment increased as M&A type FDI

inflows do not signify additional or new investment or positive change in physical capital stock

of the country. This is reported in one of the studies carried out by Planning Commission in

2002.2 The study indicated that almost 52% of the FDI inflows to India up to 2002 remained of

M&A type and hence, did not contribute much in terms of Net addition in national investment

of the country where we define national investment as the sum of domestic investment and

foreign investment. On the other hand, since most of the FPI inflows to India were in the

secondary stock and other capital markets they also rarely signify any Net addition to physical

capital stock every Year. Hence, it is highly likely that with growing degree of openness

measured in terms of global financial capital flows since the inception of the LPG regime in

India in 1991 the Net national investment remained not much positively affected by these flows

since most of these capital flows were either in secondary stock/bond markets or used to take

over an already existing domestic company or enterprise.

It is now obvious from both Figure 1.1 and Figure 1.2 that degree of openness of the Indian

economy has increased at a rapid rate since 1991 both in terms of trade flows and global

financial capital flows. The openness in terms of global financial flows is more than in terms of

traditional concept of degree of openness. This is expected as the period under consideration is

a period of financialisation of the world economy implying the hegemonic importance of global

finance and its interest over every sphere of economic life of an individual (viewed as rational

economic agent in the mainstream neoclassical theory) and state (Dasgupta 2013a). In fact, the

degree of openness measured in terms of gross global capital flows registered steep increase

(although with some fluctuations) since 2003-04. Note that by 2003-04 the Indian state almost

2 Government of India (2002), Report of the Steering Group on Foreign Direct Investment, Planning Commission, New Delhi available at http://planningcommission.nic.in/aboutus/committee/strgrp/stgp_fdi.pdf and accessed on 20th April 2014.

http://planningcommission.nic.in/aboutus/committee/strgrp/stgp_fdi.pdf

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completed the first generation of neoliberal economic reforms except full capital account

liberalization and labour market reform. Even the global crisis since 2008-09 did not stall the

increase in this degree of openness. Rather, it has increased more sharply after 2008-09 as can

be seen from the Figure 1.2 below.

Table 1.2

Degree of Openness in terms of Global Capital Flows

(1990-91 to 2011-12)

(in percent of GDP) Figure 1.2

Year

DoOGC

TA

1990-91 0.16

1991-92 0.28

1992-93 1.12

1993-94 10.3

1994-95 13.02

1995-96 12.45

1996-97 18.29

1997-98 24.46

1998-99 18.72

1999-00 37.11

2000-01 18.91

2001-02 29.49

2002-03 26.92

2003-04 21.93

2004-05 25.81

2005-06 41.54

2006-07 100.38

2007-08 124.68

2008-09 133.15

2009-10 126.72

2010-11 115.24

2011-12 136.28

Source: Database of Indian Economy as available at the RBI website www.rbi.org and accessed on 15th April

2014.

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Section 2: FDI Flows to India during the post liberalization period:

FDI is defined at present in India following the standard international norm as given by the

IMF. FDI flows include the following – (i) equity participation either in an existing domestic

enterprise at least 10% of the total equity shares of the company or in an altogether new

company by a foreign entity, (ii) inter-corporate loan or bond issue to a foreign invested firm in

India, and (iii) re-invested earning in the same foreign invested company in India. FDI flows to

India started in the colonial period. And even after Independence some global MNCs stayed

back and are still continuing their production and sale in India. The notable example in this

regard is Uniliver Company which is a UK-based MNC and whose subsidiary in India is known

as Hindusthan Liver Company since the colonial days. However, after independence from the

colonial rule in 1947, due to the policy of self-reliance as indicated in the draft of the First Five

Year Plan not much emphasis was placed upon attracting FDI flows. There is no explicit

reference in this regard in the Draft First and Second Five Year Plan documents. However, the

principle of self-reliance as was emphatically stressed in our first four plan documents

implicitly implies the state’s preference to domestic investment to foreign investment. With the

inception of LPG regime in 1991 this stance of the state towards foreign investment got

reversed and it was asserted by the Government of India in several official documents that

foreign investment in India is welcome to supplement the domestic investment and more is the

global investment flow in the direction of India more will be the economic growth. And the

Government of India took several steps from time to time to attract both FDI and FPI inflows

and have, also, gradually increased the cap on FDI in different industrial and services sector like

telecommunication, insurance, aviation industry and like.

Table 2.1 and Figure 2.1 below indicate the Net FDI flows to India from 1990-91 to 2011-12.

We have calculated the Net FDI flows to India as the difference between gross FDI inflows and

gross FDI outflows. A negative sign of Net FDI flows to India would imply that financial

resources are transferred from India to the rest of the world while a positive sign would indicate

otherwise. In Table 2.1 the word “Credit” in the second column and the word “Debit” in the

third column refer to gross FDI inflows to India and gross FDI outflows from India

respectively. The fourth column “Net” implies Net FDI flows to India calculated subtracting

column (3) “Debit” from the column (2) “Credit”. Note here the “Debit” implies the repatriation

of some foreign capital already invested in India to the rest of the world by the foreign invested

firms. This should not be confused with the FDI made by India abroad which is taken up for

discussion in the following section.

As can be seen from the Figure 2.1 Net FDI flows to India remained positive during the period

under consideration. And it has increased quite steeply from 2003-04 to 2008-09 and after that

it registered fall although still remaining positive. This fall started occurring after the outbreak

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of global economic crisis which surfaced in 2008-09 and is still remaining unabated. However,

the Government of India took several policy measures since 2008-09 to attract more and more

FDI flows. In fact, it has now allowed FDI in single as well as multi-brand retail business in the

country also.

Table 2.1 Figure 2.1

Net FDI Flows to India Net FDI Flows to India

(in US $ million) (in US $ million)

Year Credit Debit Net

1990-91 107 10 97

1991-92 147 18 129

1994-95 1351 8 1343

1995-96 2174 30 2143

1999-00 2170 3 2167

2002-03 5095 59 5036

2004-05 6052 65 5987

2007-08 34844 116 34729

2008-09 41902 165 41737

2011-12 46552 13599 32952

2012-13 34298 7345 26953

Source: Database of Indian Economy retrieved from www.rbi.org on 16th April 2014.

Section 3: Foreign Direct Investment from India:

The LPG era in India is also marked by outbound FDI flows from India to the rest of the world.

Indian MNCs during this period have started undertaking foreign investment in Africa and

Western Europe mainly. Indian big industrial houses like TATA and Reliance group in this

regard remained so far the key leaders. Table 3.1 and Figure 3.1 depict how much financial

resources on Net basis have flown out of India since 1990-91. The outward FDI flows started

mostly from 2000-01 and increased sharply during 2005-09. After 2008-09 there was slight fall

although the figure in terms of US $ million remained quite high. The second column of Table

3.1 records “Credit” on account of outbound FDI flows from India which mainly include the

repatriation of some foreign capital from abroad to India by the Indian MNCs invested abroad.

The third column “Debit” implies the gross outward FDI flows abroad by India. And the last

column of the table “Net” is the difference between “Credit” in second column and “Debit” in

the third column of the table. If the sign of Net outward FDI flows abroad by India is negative

then, it signifies Net transfer of financial resources from the Indian economy which could

otherwise have been invested within India. It is too early to arrive at a definite conclusion

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whether this Net outward transfer of financial resources ultimately will benefit the Indian

economy or not in future. We are just indicating here that on Net basis there is some significant

transfer of financial resources from Indian economy since 2000-01 and it happened at a time

when the Government of India was quite busy in devising new policy measures one after one to

attract more and more foreign financial capital to enhance Net national investment and hence,

economic growth rate. As the Figure 3.1 below confirms Net transfer of financial resources

from India on account of her outward FDI flows were steep from 2004-05 to 2009-10. After

2009-10 the Net transfer from India got reduced to some extent (perhaps due to the global

crisis).

Table 3.1

Outward FDI Flows Abroad by India

(2000-01 to 2011-12)

(in US $ million) Figure 3.1


2000-01 70 829 -759

2001-02 99 1490 -1391

2002-03 73 1892 -1819

2003-04 142 2076 -1934

2004-05 35 2309 -2274

2005-06 216 6083 -5867

2006-07 764 15810 -15046

2007-08 2477 21312 -18835

2008-09 1103 20468 -19365

2009-10 738 15882 -15144

2010-11 2562 19757 -17195

2011-12 2456 13348 -10892

2012-13 5488 12622 -7134


Section 4: Foreign Portfolio Investment in India during the post-liberalization period:

India remained largest recipient of the foreign portfolio flows from abroad in the developing

world since the inception her neoliberal policy regime in 1991. As the Figure 4.1 confirms on

Net basis actually there was for most of the period Net transfer of financial resources from India

as the sign of Net FPI Flows (calculated as gross FPI inflows recorded as “Credit” in the second

column of Table 4.1 minus gross FPI outflows recorded as “Debit” in the third column of Table

4.1) were negative for most of the Years. Hence, although India remained the largest recipient

of FPI inflows in the developing world in the last two decades, it has actually resulted in a Net

transfer of financial resources from India during the period under consideration. However, also

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note that since 2009-10 the Net FPI flows to India remained positive. This may be due to the

global economic crisis and also the shattered condition of the US economy. In fact, it is now

well known the Quantitative Easing (QE) adopted by the US Fed (the Central Bank of USA) to

inject liquidity in the US economy actually led to the US Foreign Institutional Investors (FIIs)

to use this increased amount of money supply to diversify their global portfolios more with

India remaining one of the most prime destinations of such global portfolio investments by the

US FIIs. However, during August-September 2013 when there was sharp fall in the value of

rupee vis-à-vis US dollar and an expectation was built up globally that the US Fed would soon

withdraw its QE policy, there was sharp increase in the Net FPI flows from India as many FIIs

withdrew their investments in the Indian capital market. Anyway, Figure 4.1 contradicts the

neoliberal claim that FPI inflows to India would supplement India’s domestic investment.

Instead, what we have found here that there have been most of the time Net transfer of financial

resources from India on account FPI flows to India.

Table 4.1

FPI Flows in India

(1990-91 to 2011-12) Figure 4.1

(in US $ million)

YEAR Credit Debit Net

1990-91 6 - 6

1991-92 4 - 4

1993-94 3958 311 3647

1995-96 3456 795 2661

1997-98 5573 3745 1828

1998-99 3225 3293 -68

1999-00 9951 6927 3024

2000-01 13619 10859 2760

2001-02 9259 7238 2021

2007-08 233564 206294 27270

2008-09 128511 142366 -13855

2009-10 159897 127521 32376

2010-11 253175 221704 31471

2011-12 184747 167338 17409


The LPG era is also marked by outbound FPI flows from India to the rest of the world like the

FDI flows as discussed in Section 3 above. Table 4.2 and Figure 4.2 indicate that Net outbound

FPI flows abroad by India remained negative for most of the Years since 2000-01. This in other

words signifies Net transfer of financial resources from India on account of her outward FPI

flows abroad. This Net transfer of financial resources from India is clearly imminent from the

Figure 4.2 below as the line showing the Net outward FPI flows abroad remained below the

horizontal axis for most of Years under consideration. It is interesting to note that these Net

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flows were positive during 2006-07 and 2007-08. This may be due to the withdrawal of FPIs

abroad by the Indian investors in anticipation of the forthcoming sub-prime lending crisis in US

which ultimately culminated into a global economic crisis. However, interestingly since 2008-

09 once again this Net flow became negative indicating that Indian investors started investing or

diversifying their foreign portfolios of financial assets. This may be explained in terms of their

attempt to diversify their risk of investment by standard portfolio diversification strategy as

generally discussed in the financial economics literature and also, their lack of confidence in the

Indian economy following the global crisis which has of late adversely affected the high

economic growth regime of the country and also the period since the outbreak of the global

crisis in 2007-08 is dubbed as a period of “policy paralysis” in Indian economy by the

advocates of the neoliberal policy regime who now feel that more doses of neoliberal reforms

are warranted to rejuvenate the economic growth of India and to attract more global financial

capital flows.

Table 4.2

FPI Flows Abroad by India Figure 4.2

(in US $ million)


2000-01 0 170 -170

2001-02 0 69 -69

2002-03 0 35 -35

2003-04 0 0 0

2004-05 0 24 -24

2005-06 0 0 0

2006-07 86 30 56

2007-08 236 74 162

2008-09 142 319 -177

2009-10 272 252 20

2010-11 777 1956 -1179

2011-12 863 1102 -239

2012-13 1479 2357 -878


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Section 5: External Loan of India during the post-liberalization period:

External borrowing by India includes both official external loans and private external loans

(known as External Commercial Borrowings or ECBs in short). Also, one can distinguish the

external loans of a country in terms of their term structure as (a) short-term loans (ST

henceforth) and long-term and medium-term loans (MT henceforth). Traditionally, the capital

account of balance of payments of a country used to be divided (at least theoretically) between

Net autonomous capital flows from abroad and (b) Net accommodating capital flows from

abroad which referred to the foreign financial (Net) inflows required to bridge the current

account deficit. However, it is practically not possible to identify from the India’s balance of

payments accounts which flows in her capital account of the balance of payments are

autonomous and which are accommodating. One can safely dub FDI and FPI (Net) inflows as

autonomous (Net) inflows. However, it is practically impossible from the India’s balance of

payments records which external loans can be dubbed as autonomous and which are

accommodating. But it should be kept in mind that accommodating financial flows from abroad

in the capital account of the balance of payments of a country are in the nature of external loans

– mostly taken from the multilateral financial organizations like the IMF. But we are not

making any attempt to distinguish between autonomous and accommodating external loan.

First, we will look at the ECBs by India and to India and then, will examine the ST and MT

loans. And finally, we will try to see the position of India as far as her total external loans are

concerned.

ECB is an instrument used in India to facilitate the access to foreign Credit by the Indian

corporations and PSUs (public sector undertakings) and also, by the Government of India

sometime as it happened during the mid-eighties when Late Sri Rajiv Gandhi became the Prime

Minister of India. ECBs include commercial bank loans, buyers' Credit, and suppliers’ Credit,

securitized instruments such as floating rate notes and fixed rate bonds and like, Credit from the

official export Credit agencies and commercial borrowings from the private sector window of

multilateral financial Institutions such as International Finance Corporation (IFC) and ADB and

like. ECBs cannot be used for investment in stock market or speculation in real estate. The

Department of Economic Affairs (DEA), Ministry of Finance of Government of India along

with the Reserve Bank of India monitors and regulates ECB guidelines and policies time to

time. In the post-liberalization period access to ECBs became much easier to the Indian large

corporate houses due to more liberal capital account approach.3 3 Note that the Government of India twice formed committees to recommend the pathways for full capital account convertibility (CAC) headed by S.S. Tarapore. These two committees which were constituted first in the mid-niNeties and then in the beginning of the last decade are known as Tarapore Committee on CAC. However, still today India does not have fully liberalized capital account owing mostly to the external global crisis – first due to the East Asian Crisis in the late niNeties and second due to the Global Economic Crisis which still continues unabated. India now has almost no restriction on inflows of foreign financial capital. However, some restrictions still exist for allowing outflows of some types financial capital abroad. India’s current account is already fully liberalized implying non-existence of any restriction of financial inflows and outflows in connection with any items in her current account of the balance of payments. But India now has a much more flexible foreign exchange flows related act as the earlier very stringent Foreign Exchange Regulation Act (FERA) has been relaxed and replaced by Foreign Exchange Management Act (FEMA) in the late nineties.

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In fact, it should be kept in mind that the external payments crisis of the early niNeties was

actually triggered by the large debt-overhang in the form of external commercial borrowings

taken by India during the decade of eighties from the international loan market. And on ECB

interest rate charged is at the prevailing market rate (LIBOR + country risk premium). +

Table 5.1 Figure 5.1

ECBs by India (in US $ million)

Year CREDIT DEBIT NET

1990-91 30 24 6

2000-01 0 5 -5

2001-02 3 0 3

2002-03 9 0 9

2004-05 0 232 -232

2005-06 0 251 -251

2006-07 626 966 -340

2007-08 1592 1624 -32

2009-10 974 1505 -531

2010-11 1840 1513 327

2011-12 3669 2465 1204

2012-13 2120 2217 -97


ECBs made by India since 1990-91 are shown in Table 5.1 and Figure 5.1 above. Net ECBs

made by India (measured as Net which is equal to Credit minus Debit in Table 5.1) turned out

negative from 2004-05 to 2007-08. Once again it became negative in 2009-10 and 2012-13.

Negative Net ECBs by India signify Net transfer of financial resources from India on account of

ECBs made by her. Here, the word “Credit” in the second column of the Table 5.1 means

principal repayment received by India on the loans extended by her abroad in the past while

“Debit” implies new ECBs extended abroad by India.

It is imminent from Table 5.2 and Figure 5.2 below that Net ECBs flows to India remained

positive for most of the Years during the period under consideration except for 2001-02, 2002-

03 and 2003-04 when Net ECBs to India (measured as Credit in second column of Table 5.2

minus Debit in third column of Table 5.2 where Credit indicates new FCB flows to India and

Debit principal repayment made by India on her past ECBs). So, on Net basis we can say there

have positive transfers of financial resources to India as far as ECBs to India are concerned.

However, note that increasing Net ECB flows to India have been accumulating her ECBs

outstanding and in future Indian economy may encounter severe external payments problems if

she fails to contain her present level of current account deficit as per cent of her GDP which is

quite at an alarming stage of late. Therefore, positive Net transfer of financial resources to India

on account of ECBs taken by India may lead to large debt overhang in future as these loans are

mostly taken at the market rate of interest (LIBOR plus a risk premium) which is generally

higher than the interest rate charged on official external loan. However, it is too early to arrive

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at a conclusion regarding the probability of India’s large debt overhang in future and thereby,

external payments crisis as it occurred in 1990-91 which ultimately pushed India to take to the

neoliberal path of economic reforms. The Government of India and the RBI have already started

undertaking some measures to contain both high current account deficits as per cent of India’s

GDP and also, fiscal deficit as per cent of her GDP. In fact, in 2003 the Government of India

enacted Fiscal Responsibility and Budget Management Act (FRBMA, 2003) to contain fiscal

deficit within 3% of GDP. Similarly, at present the Government of India has been

contemplating to introduce an act like FRBMA which would compel the RBI and the

Government of India to take necessary steps to contain the current account deficit within 1-2%

of India’s GDP in future. It is to be noted that most of the ECBs taken by India are short-term in

nature which triggers further apprehension regarding a probable or impending external debt

crisis for India unless she fails to reduce the import-intensity of her economy which has grown

up quite steeply since 1991 (Dasgupta 2013b).

Table 5.2

ECBs to India (in US $ million) Figure 5.2


1990-91 4252 2004 2248

1991-92 3133 1677 1456

1992-93 1167 1525 -358

1993-94 2913 2305 608

1994-95 4152 3122 1030

1995-96 4252 2977 1275

1996-97 7571 4723 2848

1997-98 7371 3372 3999

1998-99 7226 2864 4362

1999-00 3187 2874 313

2000-01 9621 5313 4308

2001-02 2684 4272 -1588

2002-03 3505 5206 -1701

2003-04 5225 8153 -2928

2004-05 9084 3658 5426

2005-06 14343 11584 2759

2006-07 20257 3814 16443

2007-08 28701 6060 22641

2008-09 13226 6578 6648

2009-10 14029 11498 2531

2010-11 22283 10451 11832

2012-13 25497 16915 8582


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16

Next we consider the short-term external loans taken by India since 1990-91 and see the

direction of Net transfer of financial resources on account of India’s short-term loans (which are

loans generally of maturity up to one Year and in some cases they are of two Years of maturity).

As the Table 5.3 and Figure 5.3 indicate from 2001-02 to 2007-08 Net transfer of financial

resources on account of Net ST external loans taken by India (calculated as Credit in the second

column of the Table 5.3 meaning new ST loan flows to India minus Debit in the third column of

Table 5.3 meaning principal repayment made by India on her past ST external loans) remained

positive. However, in 2008-09 (which is now considered as the worst Year of the presently

continuing global economic crisis) this Net transfer of resources to India became negative as

can be seen from the Figure 5.3 below. Once again from 2009-10 this Net transfer of financial

resources on account of India’s ST external loans became positive and in 2012-13 the Net ST

loan taken by India was quite high. This is once again not a good sign for the Indian economy.

Since these loans are short-term loans (which are mostly taken to bridge the trade or current

account deficit and also, by the Indian corporate houses to meet their working capital needs)

they have to be repaid in near future and unless there is a significant improvement in India’s

current account balance position quite rapidly there is a likely chance that India may face some

difficulties in repaying her ST external debt obligations. If it happens so, then the global Credit

rating agencies may reduce India’s sovereign external Credit rating thus making it difficult for

India further to arrange new loans to repay these short term debt obligations. To a large extent it

depends on whether there will be a rapid turnaround in the global economy which would

improve India’s exports demand abroad and also, (i) whether India remains successful in

containing some of her non-essential imports like gold (which are mainly made by Indian

entities and rich elites for speculative purposes when financial and real estate prices dwindle)

and (ii) whether India remains successful in reducing the energy-intensity of her economy

which relies mostly on non-renewable natural resources like oil and coal and replace this kind

of energy-intensity by renewable natural resource sensitive energy-dependence.

Next, we look at the total external debt extended by India during the post-liberalization period.

By total external loan we mean the sum of all sorts of ECBs and other private loans and all sorts

of official external loans extended by India including the official bilateral loans to other

countries like Bangladesh, Bhutan and like. Table 5.4 and Figure 5.4 indicate the Net external

loan extended by India during the post-liberalization period. Net external loan extended by

India is calculated as the gross principal repayment received by India during a Year on her past

loan to other countries (dubbed as Credit in the second column of the Table 5.4) minus the new

external loans made by India (dubbed as Debit in the third column of the Table 5.4). As can be

seen from the Figure 5.4 below for most of the period under investigation Net external loan

extended by India remained negative. This in other words indicates negative Net transfer of

financial resources to India on account of total external loans extended by her. However, these

present negative Net flows may imply India will have future claim on other countries in her

17

capital account. So, in this sense these negative Net transfers of financial resources may not be

dubbed as bad for the economy. Some of these loans have been extended by India to her

neighboring countries given the geo-political context of the Indian economy in South Asia

which a sovereign liberal democratic country like India given her historical past cannot avoid or

ignore. Sometimes these loans help the Indian business persons to develop business ties with

these countries and promote the interests of Indian industries and services sector in these

countries. Hence, from the long-term point of view these negative net transfers of financial

resources on account of total external loans extended by India may not act as something adverse

or bad for the Indian economy at large and for the peace and political stability in the Indian sub-

continent.

Table 5.3

Short-Term (ST) Loan to India



1990-91 1753 678 1075

1991-92 1900 2414 -514

1992-93 4190 5269 -1079

1993-94 3480 4249 -769

1996-97 7085 6247 838

1997-98 7034 7130 -96

1998-99 4814 5562 -748

1999-00 6779 6402 377

2001-02 5562 6355 -793

2007-08 47658 31728 15930

2008-09 41764 43750 -1986

2009-10 53264 45706 7558

2010-11 76776 64742 12034

2012-13 122734 101077 21657


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18

Table 5.4

Total External Loan extended by India



1990-91 0 6 -6

1991-92 0 5 -5

1992-93 0 3 -3

1993-94 0 6 -6

1994-95 2 10 -8

1995-96 0 17 -17

1996-97 0 8 -8

1997-98 0 22 -22

1998-99 0 21 -21

1999-00 0 10 -10

2000-01 0 17 -17

2001-02 0 87 -87

2002-03 0 32 -32

2003-04 0 128 -128

2004-05 24 128 -104

2005-06 24 88 -64

2006-07 20 32 -12

2007-08 24 28 -4

2008-09 72 416 -344

2009-10 52 420 -368

2010-11 76 102 -26

2011-12 70 226 -156

2012-13 52 338 -286


Note further, that this estimate of Net transfer of financial resources on account of total external

loans taken by India is a limited one as we have not considered here the interest payments made

by India on her past external loans which are recorded in the current account of the balance of

payments of a country, not in the capital account. It is quite obvious if we subtract the Net

interest payments from this Net external loan taken by India the positive Net transfers of

financial resources to India on account of her all sorts of external loans would be much less.

Finally, we look at the total external debt taken by India during the post-liberalization period.

By total external loan we mean the sum of all sorts of ECBs and other private loans and all sorts

of official external loans taken by India including the official bilateral loans. Table 5.5 and

Figure 5.5 below indicate the Net external loan taken by India during the post-liberalization

period. Net external loan taken by India is calculated as new external loans taken by India

during a Year (dubbed as Credit in the second column of the Table 5.5) minus the gross

principal repayment made by India on her past external loans (dubbed as Debit in the third

http://www.rbi.org/

19

column of the Table 5.5). As can be seen from the Figure 5.5 below for most of the period

under investigation Net external loan taken by India remained positive barring few Years when

they were negative. This in other words indicates positive Net transfers of financial resources to

India on account of total external loans taken by India. However, these present positive Net

flows may imply India will have future liability to the rest of the world in her capital account.

So, in this sense these positive Net transfers of financial resources may not be dubbed as good

for the economy. Some of these loans might have been used to repay past loans and also, for

non-productive purposes – the exact data of which is unavailable at the official data base in this

regard. Hence, from the long-term point of view these positive Net transfers of financial

resources on account of total external loans taken by India may not act in the advantage of

Indian economy in near future (a) unless India remains very successful in enhancing her exports

growth rates (which is quite unlikely in the present context as the global economy is still reeling

under deep recession) and (b) unless most of these external loans are put in new investment

projects so that with increasing GDP and economic growth rate India may remain solvent and

liquid in terms of her debt-repayment capability in future.

Table 5.5

Total External Loans Taken By India



1990-91 3397 1187 2210

1991-92 4367 1328 3039

1999-00 3074 2173 901

2000-01 2941 2514 427

2001-02 3352 2148 1204

2002-03 2878 5974 -3096

2003-04 3326 6080 -2754

2004-05 3785 1785 2000

2005-06 3607 1841 1766

2006-07 3747 1960 1787

2007-08 4217 2099 2118

2008-09 5160 2375 2785

2009-10 5846 2585 3261

2010-11 7806 2840 4966

2011-12 5576 3124 2452

2012-13 4683 3415 1268


As we have already mentioned above it is the high share of ECB in the entire external loan

portfolio of a country which may trigger crisis for the country in future as these loans are

mostly taken at the market rate of interest at the global level vis-à-vis the official loan whose

interest rates are always lower than those on ECBs. What we found from the official data

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20

(Government of India, 2012-13) the percentage of ECBs taken by India in her entire external

loan portfolio has increased sharply from around 10% in 1990-91 to more than 50% in 2011-

12. This is no doubt an alarming signal for the Indian economy. Still now India is not

encountering any external debt payment problem because of accumulation of her huge

foreign exchange reserves. But note that most of these foreign exchange reserves which

India has accumulated since 1991would pose liability for the Indian economy in future as

they are accumulated either due to FDI inflows, or FPI inflows or external debt flows. Less

than 30% of the accumulated foreign exchange reserves which India possesses now are on

account of (a) exports revenue and (b) remittance earnings in the current account which have

no future liability. India is the largest remittance receiving country in the world today. A

certain portion of the India’s foreign exchange reserve is due to NRI deposits in the Indian

banks which are liabilities to these banks and hence, to the Indian economy. Therefore,

given proportionately large increase in the ECB in the total external loan portfolio of India

may culminate into an external payments crisis unless there is rapid recovery in the global as

well as Indian economy. Note that in 1991, the presence of just 10% ECBs in the total

external loan portfolio of India triggered an external payments crisis as most of these loans

were due by then and Indian economy did not have sufficient foreign exchange reserves to

meet these debt obligations. In fact, at one point of time in the early part of 1991 India had

foreign exchange reserves to meet hardly one month of her oil imports bill.

Section 6: Foreign Exchange Reserves of India during the post-liberalization period:

Table 6.1 and Figure 6.1 below indicate the Net foreign exchange reserve flows to India from

1990-91 to 2012-13. We have arrived at the Net foreign exchange reserve flows to India every

Year for the period under consideration as the difference between gross foreign exchange

reserve flows to India and the gross foreign exchange reserve flows from India. Note that from

Table 6.1 barring two Years (1990-91 and 1995-96) Net foreign exchange reserve flows to India

during the period under consideration remained negative. Although India has accumulated a

huge foreign exchange reserve stock over the Years since 1991-92, the fact that almost every

Year on Net basis foreign exchange reserves flow out of the country remains foreclosed. If this

trend continues and we fail to enhance our foreign exchange earnings through exports and other

current account receipt items like remittance inflows and like (which have no future liability for

the country) Indian economy may once again face an external payment crisis. The danger of

such crisis has become more pronounced in recent time due to (a) dwindling export earnings

due to global crisis, (b) decreasing remittance inflows owing to the global crisis, (c) rapidly

increasing import intensity and energy-intensity of the Indian economy, (d) soaring external

debt servicing obligations, and (e) lastly, tendency of fall in the value of rupee vis-à-vis US

dollar and other major currencies of the world like Euro and Pound which would trigger large

outflow of foreign portfolio capital from the Indian stock market as it happened during August-

September 2014. Two points merit attention at this juncture as follows:

21

(1) There is a cost of holding huge stock of foreign exchange reserves as a significant portion

of these reserves are prone to enhance future liability of Indian economy to the rest of the

world and on a significant portion of these reserves Indian state does not have any control

as their inflows or outflows are guided by the happenings in the global economy in this

age of globalization which is beyond the control of the Reserve Bank of India and the

Government of India.

(2) Also, one should take note of the fact although at the gross level every Year there is now

huge foreign exchange inflows, on Net basis the Yearly flows are negative signifying

India is actually paying more than she is receiving from abroad as far as her foreign

exchange reserves are concerned.

Table 6.1

Foreign Exchange Reserves of India

(1990-91 to 2012-13)

(in US $ million)

Year

Gross Foreign Exchange

Inflows

(2)

Gross

Foreign

Exchange

Outflows

(3)

Net Foreign Exchange

Reserve Flows to

India

(4) = (2) – (3)

1990-91 1278 - 1278

1991-92 - 3384 -3384

1992-93 - 698 -698

1993-94 - 8723 -8723

1994-95 - 4644 -4644

1995-96 2937 - 2937

1996-97 - 5818 -5818

1997-98 - 3893 -3893

1998-99 - 3829 -3829

1999-00 - 6142 -6142

2000-01 1448 3826 -3826

2002-03 0 13050 -13050

2003-04 0 13441 -13441

2005-06 4672 92164 -92164

2006-07 0 36606 -36606

2007-08 0 19724 -15052

2008-09 20080 26793 -26159

2009-10 0 31421 -31421

2010-11 0 16985 -16985

2011-12 12831 11757 -11757

2012-13 0 7290 -5842


http://www.rbi.org/

22

Figure 6.1


Section 7: Overall Capital Account Balance of India during the post-liberalization

period:

In this section, finally we will take a look at the overall capital account balance of India during

the post-liberalization period. Now, it is well known that balance of payments of a country

always balances meaning that current account balance plus capital account balance should

always be zero. However, in practice there remain some discrepancies in recording some items

(both Credit and Debit items) in the current and capital account of the country, which is

generally rectified by in terms of a separate head called official adjustment in the balance of

payments. However, in this work we ignore such official adjustment in India’s balance of

payments. Hence, a capital account surplus (deficit) would signify a current account deficit

(surplus). As can be seen from the Table 7.1 below capital account balance (dubbed as Net in

the fourth column of the Table 7.1) measured as Credit in the second column of the Table 7.1

minus Debit in the third column of the Table 7.1 remained always positive during the post-

liberalization period. This in terms of our logic implies continuous existence of current account

deficit in India’s balance of payments. As the Figure 7.1 indicates there are two peaks

suggesting very high positive capital account balance for India in 2000-01 and 2006-07.

However, these peaks were followed by sharp dips in the subsequent Years with the overall

capital account balance remaining positive anyway and hence, signifying the persistence of

current account deficit in India’s balance of payment. Of late, burgeoning current account

deficits on account of (a) rise in oil import bill, (b) rise in imports of gold and other precious

http://www.rbi.org/

23

metals like silver for speculative investment mainly, and (c) increase in the import bill for

defence-related equipments. A positive capital account balance on the other hand, signifies

increase in the foreign exchange reserves stock of India over the Years.

One can distinguish between two types of capital flows from abroad – (i) debt-creating capital

flows and (ii) non-debt creating capital flows like FDI and FPI inflows. It is desirable for the

health of any economy that proportionately non-debt creating capital inflows should be more

than the debt-creating capital flows as the latter pose future liability for the country which the

former may not. However, in this age of globalization owing to the advancement in information

technology (IT Technology) even non-debt creating capital flows remain to a large extent

influenced by the whims and fancies of the global economy – especially those of the global

finance (Dasgupta 2013a). In fact, the experience of the Indian economy during August-

September 2014 indicates that global capital took no time to leave Indian capital market when

rupee started depreciating against US dollar due to global factors mainly and there was an

expectation that the US Fed would soon withdraw its Quantitative Easing policy. Hence, in

today’s context one cannot safely conclude that proportionately non-debt creating capital

inflows should be more than the debt-creating capital flows for the health of a country’s

economy.

The overall Capital Account Balance as a percentage of GDP has been growing since 1990-91

from 9.16% to 171% in 2000-2001 and then deteriorated to 11.27% in 2004-05. It increased

substantially in 2005-06 and in 2011-12 it stood at 7.67% of GDP.

We have found the correlation coefficient between the degrees of foreign capital related

openness and overall capital account balance as a percentage of GDP is -0.13 which indicates

that mutual association between overall capital account balance and the foreign capital related

degree of openness is quite small. The negative sign of the correlation coefficient is indicative

of movement of these two variables in opposite direction although their mutual association is

not sufficiently large.

Overall balance of payments as recorded in the database of the Indian economy as percent of

GDP increased from -3.23% of GDP in 1990-91 to 10.55% in 2011-12. The correlation

coefficient between the foreign capital-related degree of openness and overall balance of

payments as percentage of GDP is 0.26 which indicates that the mutual association between the

foreign capital-related degree of openness and overall balance of payments as percent of GDP is

positive. This means they together moves in the same direction – may be as cause and effect of

each other. However, the value of this correlation coefficient is very low and hence, we can

safely argue that the mutual association between the foreign capital-related degree of openness

and overall balance of payments as percent of GDP is weak.

The correlation coefficient between trade-related degree of openness and overall capital account

balance as percent of GDP is -0.03. This means that with increase in trade-related degree of

24

openness overall capital account balance as percent of GDP would fall and vice versa.

However, since the value of the correlation coefficient is very low (in fact, very close to zero

although negative) we can safely conclude there exists hardly any mutual association between

the trade-related degree of openness and the overall capital account balance as percent of GDP.

The correlation coefficient between the trade-related degree of openness and the overall balance

of payments as percent of GDP is 0.29. Once again the mutual relationship between these two

variables (although positive) is very low and hence, we can conclude that this mutual

association between trade-related degree of openness and overall balance of payments is not

strong enough which is generally claimed by the advocates of neoliberal policies that with more

openness in the economy the balance of payments situations would improve in favour of the

respective country’s economy. However, our calculation based on the official data, as we

accessed from the online RBI database of Indian economy, does not corroborate to this view at

least for India during the post-liberalization era.

In this project work we have made an attempt to investigate the capital account in the balance of

payments of India during the post-liberalization period. We have considered certain heads of

capital account like FDI, FPI and external loans. However, we could not consider the other

heads of India’s capital account viz. bank capital, monetary movements and rupee debt service

and like. So, in this respect our analysis of India’s capital account during the post-liberalization

period is limited.4

Table 7.1

Overall Capital Account Balance of India

(1990-91 to 2012-13) Figure 7.1

(in US $ million)

Year Credit

(2)

Debit

(3)

Net

(4)=(3)-

(2)

1990-91 22768 15712 7056

1991-92 23339 19424 3915

1992-93 22617 18741 3876

1993-94 28953 20059 8894

1994-95 25915 17413 8502

2001-02 43257 411052 67755

2002-03 46368 439921 63740

2004-05 98539 308375 7396

2008-09 315771 70517 28022

2009-10 345766 59149 16736

2011-12 478808 34706 8551

2012-13 471701 45286 8840


4 One can see Dasgupta (2013b) for analysis of bank capital in India’s capital account in recent time.

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25

Conclusion:

Summing up our findings in this work on India’s capital account in her balance of payments

during the post-liberalization period the following points merit our attention:

1. First, during the post-liberalization period, as is expected, degree of openness of the

Indian economy (both in terms of foreign trade-related openness and the global capital

flows-related openness) increased manifold.

2. Although India’s overall capital account balance remained positive throughout the period

under consideration, there are some Net transfer of financial resources from India in some

heads of the capital account (both debt-creating and non-debt creating capital accounts’

heads like FDI and FPI flows).

3. What is most alarming is the sharp rise in the proportion of ECBs of India in her total

external debt portfolio. This is alarming because these loans are taken at the prevailing

global market rates of interest (LIBOR + risk premium) which are generally higher than

the interest rates charged on any official external loan.

4. Also, alarming is the fact that proportion of short-term external Credit flows to India has

increased in recent time in her total external debt portfolio. Although the country is not

facing any debt solvency problem at present, if the global economic situation turns out

more and more bleak in near future then it may pose serious problem to India for meeting

her in-time debt repayment obligations.

5. We have found despite enormous increase in non-debt creating gross capital inflows (in

the form of FPI inflows first followed by FDI inflows) there have been some significant

Net transfers of financial resources from India to the rest of the world on these two

accounts.

6. Similarly, there is now huge accumulation of external loans although debt-GDP ratio and

debt servicing ratio (measured in terms of India’s debt payment obligations including

principal repayment and interest payments to exports earnings of India) still remain

within the comfort zone. However, with more and more openness the Indian economy is

now to a large extent influenced by the vagaries of the global economy. The adverse

impacts of recent ongoing global economic crisis on India’s exports earnings, remittance

inflows and rising import bills are testimony to this claim.

7. The advocates of neoliberal policies always prefer global capital (both in the form of FDI

and FPI inflows) as that would supplement domestic savings and hence would increase

the Net national investment of the country and ultimately would lead to higher economic

growth. However, following Sen (1994) and also Dasgupta (2013b) we can argue the

following:

g = s/[k-(RT/Y] where g stands for economic growth rate, s for domestic savings ratio, k

the capital-output ratio, RT the Net financial resource transfer and Y the GDP. It is clear

from this equation that if k is given and s and Y do not increase much in the immediate

26

short run then negative Net transfer of financial resources i.e. negative RT would increase

the value of the denominator of the right hand side of the equation would rise which

would imply a fall in the economic growth rate (g). In fact, if RT/Y is greater than k in

then the sign of the right hand side expression of the equation will be negative given that

s is always positive. Then, economic growth rate would be negative in the immediate

short run.

8. At the end, our claim is that it is not always the fact that inflows of global capital (debt

creating and/or non-debt creating) do not necessarily put a domestic economy like India

on higher growth trajectory. It has to be seen whether the increasing gross inflows of all

sorts of global capital do ultimately result in increase in Net transfer to financial

resources to the recipient country or lead to Net transfers of financial resources from the

host country itself. If the latter happens then as our growth equation in point (7) above

indicates may lead to lower growth rate, not higher growth rate. The advocated of

neoliberal reform only considers the gross inflows of global capital while prescribing for

policy imperative which would be global capital friendly. But what they miss out or do

foreclose is the fact whether in particular historical context these gross flows instead of

rejuvenating an economy would result Net drain of financial resources from the country

or not as it happened in India during the colonial period.

9. Our estimates of Net transfers of financial resources on account of FDI, FPI and external

debt flows in the capital account of the balance of payments are limited as we have not

considered the Net interest payments obligations and Net investment income obligations

of India while measuring Net transfers of financial resources on account of FDI, FPI and

external debt inflows. These two items are recorded in the current account of the India’s

balance of payments. Our hunch is that if we include these two items in their respective

places in calculating Net transfer of financial resources on account of FDI and FPI and

external debt flows respectively perhaps we would observe a much larger Net transfers of

financial resources on these accounts from India during the post-liberalization period.

27

References:

Dasgupta, Byasdeb (2013a), “Financialization, labour market flexibility and global crisis:

a Marxist perspective” in Byasdeb Dasgupta (ed), Non-Mainstream Dimensions of

Global Political Economy – Essays in Honour of Sunanda Sen, Routledge: London, May

2013; pp. 76-100. ISBN 978-0-415-53500-7

Dasgupta, Byasdeb (2013b), “Some aspects of external dimensions of the Indian

economy in the age of globalization” in Byasdeb Dasgupta (ed), External Dimensions of

an Emerging Economy, India – Essays in Honour of Sunanda Sen, Routledge: London,

June 2013; pp. 44-67. ISBN 978-0-415-53501-4

Government of India (2013), Economic Survey – 2012-13, Oxford University Press: New

Delhi.

Sen, Sunanda (1994), “Dimensions of India’s External Economic Crisis” Economic and

Political Weekly, April 2, 1994; pp. 805-812.

Database on Indian Economy available at the website of the Reserve Bank of India

www.rbi.org and this website was accessed by us during April 14-16, 2014.

http://www.rbi.org/

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