Phase IFoundation
Background
Overview
UPSC frequently asks about the types, implications, and management of foreign capital flows, their impact on India's balance of payments, exchange rate, and economic stability, especially in the context of liberalization and globalization.
Foreign capital flows refer to the movement of financial resources from one country to another, playing a crucial role in financing a nation's current account deficit, boosting investment, and driving economic growth. These flows can be broadly categorized into foreign direct investment (FDI) and foreign portfolio investment (FPI).