RBI (not GoI) announcing a push towards CAC – widely seen as increasing the vulnerability of emerging market economies to global macroeconomic shocks – on the day the Global Hunger Index (GHI) showed India slip three ranks to fall below Pakistan Bangladesh and Nepal marks a seismic shift in India’s macroeconomic policies.

India is on the cusp of a fundamental shift [toward capital account convertibility] with increased market integration in the offing and freer non-resident access to debt on the table’ said RBI Deputy Governor T Rabi Sankar speaking at the Fifth Foreign Exchange Dealers’ Association of India Annual Day last Thursday. With that one sentence he resurrected a debate that had long been laid to rest even by the most ardent fan of capital account…

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