The government said on Thursday it has further liberalised external commercial borrowings guidelines by allowing companies to bring in funds up to $500 million for rupee expenditure, to enhance capital inflows in dollar terms.

"One of the requirements that RBI has addressed is the issue of rupee liquidity. Our assessment is that there is equal need to address capital flows in terms of dollar, as such government has taken steps to amplify and amend the ECB regulations," Economic Affairs Secretary Ashok Chawla said.

On Wednesday, the government had announced further liberalisation of ECB norms allowing companies to go for $500 million of these debts under automatic route in a year for rupee or dollar expenditure.

Chawla said the government has been responding to the evolving macro-economic situation adequately and in a timely manner.

"The current situation is basically and essentially a result of the international volatility in the financial markets," he said.