ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Managing Capital Flows, c.2010: Policy Options for India

With the emergence of a "two-speed" world in the aftermath of the 2008 crisis, financial flows are expected to flood emerging markets' shores, including those of India which has positive growth and interestrate differentials vis-à-vis the advanced countries. This article discusses existing policy options for India and concludes by emphasising the need to evolve a medium-term response strategy, one of whose elements include countercyclical fiscal responses.

DEALING WITH THE CAPITAL SURGE

Managing Capital Flows, c.2010: as large as that in 2007, export growth is low and likely to remain depressed, the
Policy Options for India fiscal deficit wider by over 2 percentage points and short-term debt inflows are ris
  ing fast. The external environment is dra
  matically different: Advanced countries
Renu Kohli are on a low-growth path and interest

With the emergence of a “two-speed” world in the aftermath of the 2008 crisis, financial flows are expected to flood emerging markets’ shores, including those of India which has positive growth and interestrate differentials vis-à-vis the advanced countries. This article discusses existing policy options for India and concludes by emphasising the need to evolve a medium-term response strategy, one of whose elements include countercyclical fiscal responses.

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