Some experts have, however, aired their concerns on this issue. “This will reduce inflow and increase outflow in a scenario where we need more capital expansion. Rather than encouraging outflow of capital, the RBI should have encouraged greater capital absorption for capacity expansion,” said Rajiv Kumar, director and chief executive of ICRIER.

The monetary policy that encourages outward flow of foreign currency will check the appreciation of Rupee. “The various measures announced in the policy, which also indicate certain degree of liberal approach to outward flow of foreign currency, are most welcome under the present conditions, since they would have a sobering effect on the rapidly appreciating rupee,” said CII president R Seshasayee.