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Wednesday, May 16, 2007

A maze of twisty little capital controls

In the 1970s, India excelled in tweaking a gigantic system of controls on trade and industry. There were thousands of levers of power, and bureacrats + politicians utilised them on a day to day basis based on various needs. We are in that kind of world today with capital controls. On one day, RBI says that individuals can take $100,000 per year out of the country. On another day, fresh rules are introduced [pdf] to block one possible use of this money - posting margin for trading on futures markets. Andy Mukherjee has a great piece on Bloomberg about this flip-flop. The edit in Financial Express that he talks about is here.

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