An article on Economics is what one would feel boring to read if he has no knowledge of finance and commerce and yet this one turns out to be pretty informative on how the International Monitory Fund has come out of the cocoon and has relaxed its default goal of a common Capital account Liberation across the whole world. And this step is being considered a breather for India which is undergoing uncontrollable capital flows in the current market. Though Tarapore committee has first suggested that Capital flows under constant monitoring can improve GDP of countries in the third world by macro economical adjustments and market develops which would then result in capital flow controls, IMF was not ready to buy that. However it has now amended that capital flows from a country can be regulated under certain conditions. It is now the choice of an individual country to negotiate for their own interest rates with the IMF.
Article takes on example of how Malaysia had come out of its financial crisis by restricted foreign exchange by any means during the economic meltdown, contrary to what IMF had suggested all the south east asian countries to increase its cash flows and regulate the economy but reducing expenses on public. this explains and suggests that IMF should come out of the belief the ultimate goal of One size to fit all since its not practically possible having seen the economic scenario since the inception of Capital account liberalization. Author thus concludes of all countries, India should make the best use of this change amde by IMF and regulate its capital flows based on the current economic scenario She is facing.
- Vamshi Regalla
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