What Can India Do to Stop the Capital Flight?: Andy Mukherjee

Money is leaving India at an alarming pace. Investment flows from overseas have dried up just as the Iran war has exploded the trade deficit. The rupee has taken a thrashing; official reserves are getting drained. A policy package to ward off a full-fledged currency crisis is on its way. Or at least that’s the market expectation, though there is considerable disagreement over exactly what should be in it.

Taking cues from history, some have advocated overseas fundraising. State-run lenders have borrowed on New Delhi’s behalf during past external crises. For instance, they scooped up $34 billion during the Federal Reserve’s 2013 taper tantrum, including $26 billion ...