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India has safeguards in place to mitigate risks from capital flows: IMF

Capital flows have several benefits. They finance needed investments. They help insure against some kinds of risks. There are many benefits to countries from having capital flows in India and also benefits from receiving those capital flows, IMF's First Deputy Managing Director, Gita Gopinath, told reporters here.

March 31, 2022 / 06:52 AM IST

India, which has received a record number of foreign direct investment during the last few years despite COVID-19 crisis, has quite a few safeguards in place to mitigate the risks from capital flows, the International Monetary Fund said Wednesday.

Capital flows have several benefits. They finance needed investments. They help insure against some kinds of risks. There are many benefits to countries from having capital flows in India and also benefits from receiving those capital flows, IMF's First Deputy Managing Director, Gita Gopinath, told reporters here.

The IMF on Wednesday released a paper on the Review of the Institutional View (IV) on the Liberalization and Management of Capital Flows. The IV was adopted in 2012 and provides the basis for consistent Fund advice on policies related to capital flows.

The IV aims to help countries reap the benefits of capital flows while managing the associated risks in a way that preserves macroeconomic and financial stability and does not generate significant negative outward spillovers.