T C A Srinivasa-Raghavan: CAC - Look before you leap


"Full capital account liberalisation promises no large benefits, while it increases the risk of things going badly wrong."  Following Don Patinkin's famous four-quadrant diagram of macroeconomic equilibrium, which is achieved only if the other three quadrants (depicting the labour, product and financial markets) are in equilibrium, one can say that India has done nothing in the first, something in the second and the most in the third. In that sense, India's economic reforms have been lopsided. The standard explanation for this, trotted out by na├»ve academics, is the "reform-by-stealth" ...