CAPITAL FLIGHT

It is simply, moving out the large sum of money from the nation. 

In other words, it is moving out large amount of capital from your home country to foreign country. 


The reasons could be :

• Political instability 

• Currency devaluation 

• Defective system of capital control

• Legal instability

• Type of exchange rate system adopted by the country for international trade.

• The rise of digital money

• Increased Money Laundering activities 

• Fear of increased Capital Gains Tax (CGT) 

• Fear of decreasing the strength resource of the Nation for which it is recognized. 

Capital flight can be legal or illegal. If the government, through its stringent rules that discourages the movement of capital from their country- then the capital flight could be said to be legal. However, if foreign investors tries to create a situation of capital blocks through restrictions of trade activities it would be called as illegal capital flight. 

Generally, illegal capital flight is increased if the governmental laws, rules and controls- are more stringent and rigid in nature. If we analyze the situation of 1970-1980 of India capital flight, we can find that, there were billions of dollar currency moving out of the country. The researchers found that, the main reason behind it was stringent rules in relation to currency controls. 

Similarly, Due to high inflation and devalued currency - Argentina has faced a huge capital flight for years. 

The deep rooted economic and political difficulties have given the birth to the situation of capital flight. The situation of civil war has encouraged the capital flight in Pakistan, Nigeria and others.

When we talk about the exchange rate system in international trade, we can find three exchange rate system.They are :

• Floating Exchange Rate System

• Fixed Exchange Rate System

• Controlled Exchange Rate System 

Nepal has adopted Pegged Exchange Rate System. This has also been one of the reason of capital flight for the country. Researchers has agreed that,  pegging with Nepalese currency has led to the appreciation of currency in line with Indian currency. On contrary, it has also increased trade deficit as well as Forex currency reserve of Nepal. 

Most of the commercial banks in Nepal provides interest from 3-5 % to their depositors whereas, India provides 8-9% interest to their savers. This has encouraged Nepalese depositors (both households and business persons) to swift their deposits to India. Similarly, textiles, automobiles, agriculture or electronics- the imports based economy has placed a burden of capital flight for Nepal.


In order to control the situation of capital flight, most of the nations has made a currency control laws as to - utmost currency amount that could be taken out of the country. Different countries has also made laws to encourage Foreign Direct Investment rather than Foreign Portfolio Investment. 

In conclusion,

Capital Flight not only decreases the purchasing power of the country but also makes imports and foreign facilities expensive.

Pic.Credit :www.canstockphoto.com

Modern Government HR Vs Traditional Government HR

Since a decade, the staffing system of governmental jobs has been found more and more structured, fair and competitive.

Gone are the days, where people used to take government staffs for granted.

The Public Service Commission has been found to be successful in digging out the best resources from the market, by conducting -

·         -Written exam

·         -Practical exam

·         -Interview

·         -Any other ways as per necessity of the commission

It is said “warriors must have best weapon to win the battlefield”. Same is the case with these filtered human resource. They can perform their best only if they have sound non-human resources within their set of parameters. The staffs are always willing to work day and night for the benefit of the organization.

The over qualified staffs has been appointed for the governmental jobs. This has brought both opportunities and threat for the organization. On the one hand, the organization is benefited from the capabilities of the human resource, on the other hand, they find difficult to cope up with the volatility of the employee turnover. This has given rise to a paradigm shift.

I strongly believe that, in order to achieve success for any organization, the demographic composition of different group of people plays an important role in the society. All new, semi-old and old generation staffs are equally important. A flowing river (young and energetic staffs) must have two definite boundaries (older staffs) and a bridge (semi-old staffs) to get it into the right track. Absence of any, or higher presence of any, will definitely bring challenges to cope up with the dynamism of environment. 

Technological change has definitely shorten the period of generation gap. There is a great degree of threat from getting technologically obsolete day by day. The communication system of web 2.0 has compelled human resource to either boom or get doomed from the market.

The new era of human resource employed in governmental jobs has been provoking the traditional rules, structure, framework, working patterns, and ethical behavior as the pace of change.

Out of the thousands of prospective candidates, only limited people are selected for the appointment. Although, students puts their utmost effort in order to be a part of government jobs. However, due to limited seats, only the best are able to get into the list. 

So, the general public must be aware that, new governmental employees are much more energetic, capable, smart, flexible, dynamic, visionary and ethically governed –as compared to the traditional staffs. Therefore, it is the time to change the mind set of people.