EVOLUTION OF FII POLICY IN INDIA

Developing countries have two options of raising capital first, by creating capital surplus from internal sources of capital formation such as controlling consumption, reducing foreign imports and other measures such as taxation, public borrowing, budgetary savings from current revenue and profits of public enterprises. However, due to many rigidities in the internal economy, these measures can not accumulate much capital and the rate of their accumulation will be more or less static and not flexible. The second method of capital formation is taking foreign assistance for accelerating the rate of internal capital formation is the shortest period of time. Foreign capital helps the developing economics overcome their balance of payments crisis as well.However,Foreign Capital has its own drawbacks especially if it is in form of Foreign Institutional investment which is mostly in