Pitching for continuing financial sector reforms, the Planning Commission on Wednesday said opening up of capital account in an unrestricted manner could trigger volatility.

Speaking at the Economic Editors’ Conference, panel deputy chairman Montek Singh Ahluwalia said, “The real lesson (from the downturn) is that opening up capital account in an unrestricted manner could lead to volatility. The financial sector reforms should continue in a normal way.”

Ahluwalia said there are definite prospects of global financial inflows to increase and pointed out that the country could absorb those foreign investment flows. “Obviously we will remain watchful of flows of short-term debt, but a revival of foreign investment flows is very welcome,” he said.

On the growth front, Ahluwalia said the economy would grow by 6.5 per cent during the current fiscal. His assessment of economic growth is marginally higher than 6.3 per cent projected by the Commission earlier.