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India facing problems managing capital flows: FM

business Updated: Oct 30, 2007 11:40 IST

Reuters
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India needs a "huge amount" of capital inflows to grow its economy at a faster rate but officials are now facing problems managing them, the finance minister said on Tuesday.

"Today in India, we have a problem of enormous capital inflows. This is a completely new situation for us. We welcome capital but we must learn how to manage capital, absorb capital," Palaniappan Chidambaram said.

"We need to put in place appropriate regulations. We need to put in place appropriate risk management systems."

He added that India's investment to GDP ratio would rise to 40 per cent in the next 4-5 years.

Chidambaram told a conference organised by Fortune in the Indian capital that a rise in protectionist trade barriers in some advanced countries was a matter of concern.