Impact of Regulations on ECB Inflows

External commercial borrowings (ECB) are loans availed by resident entities from non-resident eligible lenders under norms established by the government. The government amends its policies from time to time to enable domestic enterprises to borrow from global markets. Since liberalisation, the Government of India also has relaxed its policies to allow Indian firms to access the international capital markets. The present study focuses on the examination of the impact of key changes in ECB policy done by the government of India on ECB inflows. This is performed by conducting CHOW breakpoint analysis and ARIMA modelling methodologies. The results of the CHOW break test indicate a significant impact of policy changes on the pattern of capital inflows, and the findings of the ARIMA model indicate a significant gap between actual and forecasted ECB inflows.