“Administrative restrictions of capital flows are blunt instruments and can have unintended consequences,” said Mr Paulson here while addressing the Indo-US CEO Forum here. However, he said, “We understand that Indian officials are concerned that greater capital flows associated with a financial centre could add to inflationary pressures, destabilise financial markets and add to exchange rate volatility.” Further, Mr Paulson asserted that US firms are looking forward to investment in power and agriculture sector in India. He remarked that investors want certainty in their operating environment. “India need transparent and independent regulatory frameworks.”
Nuclear pact
Meanwhile, the US Treasury Secretary said the United States was committed to the nuclear cooperation agreement with India and the pact would provide India access to the technology, which can help it reach economic and environmental objectives.

“The historic agreement on civilian nuclear cooperation is an important part of the US-India relationship, and its is beneficial for both the countries. India is one of the largest and most peaceful states with advanced nuclear technologies and has been isolated from the rest of the world on nuclear issue.”

Both India and the United States share the challenges of ensuring secure and clean energy supplies, the US Treasury Secretary said adding: “ We understand that economic growth and environment responsibility are necessary, compatible goals. Moving forward with the civilian nuclear agreement is one part of the solution.”Mr Paulson said that if the two countries were to be successful in meeting their energy and environmental challenges, they must be against the backdrop of a strong economy.