No doubt our economy requires capital flows,but the funds should help to strengthen our capital market and they should not in any way bring in undesirable effects in the money supply,inflation,exchange rates and unmanageable volatility in the capital market.The suggestion to curb portfolio inflows through a staggered programme of phasing out P-Notes in this context is very apt and SEBI Should be in a position to identify the nature and source of funds flowing into the market with appropriate records and procedures.
It is time to curb undue volatility in the market influenced by the strategies of FIIS to exploit and make money taking advantage of our economy's dependence on foreign inflows. What the economy needs is FDI and funds which are of semi permanent nature and definitely not funds which can disturb the stability and order in the stock market.
This appeared in ET, 10/09/09
Dr.T.V.Gopalakrishnan
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