Not all capital inflows are welcome

Monday’s policy announcements – in the form of further significant opening of the capital account – to restore investor confidence deserve a failing grade. The response of most analysts is that the policy changes will at best succeed in attracting capital and at worst will fail to do so. Wrong. The policy changes are bad on substance. They are possibly also troubling for what they signal about the independence of one of the few competent institutions left — the Reserve Bank of India (RBI). Consider each.

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