billion during 2007 – 08, the year just before the crisis. they dropped to as low as us $ 7 billion in 2008 – 09 at the height of the crisis. capital flows are estimated to have recovered to around us $ 50 billion in 2009 – 10. 15. india has followed a consistent policy on allowing capital inflows in general and on capital account management in particular. our position is that capital account convertibility is not a stand alone objective but a means for higher and stable growth. we believe our economy should traverse towards capital convertibility along a gradual path – the path itself being recalibrated on a dynamic basis in response to domestic and global developments. we will continue to move towards liberalizing our capital account, but we will revisit the road map to reflect the lessons of the crisis. as regards a tobin type tax, we have not so far imposed nor are we contemplating one. however, it needs reiterating that no policy instrument is clearly off the table and our choice of instruments will be determined by the context. ostry, jonathan d. and others ( 2010 ), “ capital inflows : the role of controls ”, imf staff position note, spn / 10 / 04, february 19, 2010. 16. among the components of capital flows, we prefer long term flows to short - term flows and non - debt flows to debt flows. the logic for that is self - evident. our policy on equity flows has been quite liberal, and in sharp contrast to other emes which liberalized and then reversed the liberalization when flows became volatile, our policy has been quite stable. 17. historically, we have used policy levers on the debt side of the flows to manage volatility. contrary to popular perception, we have used both quantity and price based variables to moderate debt flows. there is a ceiling on the extent of fii investment in sovereign and corporate debt ( quantity variable ) and there is also a withholding tax ( price variable ). external commercial borrowings ( ecb ) by corporates come in through both an automatic route and an approval route. ecb flows under both the automatic and approval routes are moderated by interest rate ceilings ( a price variable ) and those under the automatic route through an additional ceiling on total quantity ( a quantity variable ). non - resident indians ( nri ) deposits are monitored through an interest rate ceiling, a price variable. 18. our exchange rate policy is not guided by a fixed

there remains considerable unease among some segments about the way markets distribute that wealth and about the effects of raw competition on the civility of society. thus, should recent positive trends in economic growth falter, it is quite imaginable that support for market - oriented resource allocation will wane and the latent forces of protectionism and state intervention will begin to reassert themselves in many countries, including the united states. for now, the process of globalization is being aided by strengthening economic growth, which is clearly being driven by an accelerating application of new insights. technological innovation, however, arguably comes in bunches as new discoveries feed on one another to push forward innovation until the effects of the initial impetus finally peter out. the vast electrification of our societies and, before that, the spread of the railroads helped elevate economic growth for a considerable period of time. but the pace of growth eventually slowed when full, or near - full, exploitation of the newer technologies was achieved. the most recent wave of technology has engendered a pronounced rise in american rates of return on high - tech investments, which has led to a stepped - up pace of capital deepening and increased productivity growth. indeed, it is still difficult to find credible evidence in the united states that the rate of structural productivity growth has stopped increasing. that is, even after stripping out the significant impact on productivity acceleration of the recent shape of the business cycle, the second derivative of output per hour still appears to be positive. if we knew at what stage of the current technological wave we were in, we could, i assume, confidently project when these elevated rates of change in long - term earnings expectations, productivity growth, and, hence, wealth creation would return to a more historically average pace. for it seems evident that once such a wave begins to crest, much of the self - reinforcing virtuous cycle presumably fades, as it has in the past. in such a scenario, full development of available technological synergies and their competitive deployment would damp the historically high prospective rates of return on capital investment and slow the pace of capital deepening. the level of structural productivity does not recede, of course, since once gained new technological insights are never lost, but its rate of increase would slow, and projections of long - term profits growth presumably regress back to earlier magnitudes. from any perspective, of course, a tapering - off in productivity acceleration is inevitable at some point in the future. in the past