Financial Markets and the Economy - Intersections

 (This article appeared on 27th May 2026 in the Business Standard, link:  https://www.business-standard.com/opinion/columns/india-s-policy-mix-needs-a-rethink-on-capital-flows-and-rupee-stability-126052601924_1.html  - summarizing my views expressed on this CNBC Indianomics show hosted by Latha Vankatesh: https://youtu.be/E5U8F-kA17s?si=ucrLbGDz277Yhq_a ) One root cause of rupee weakness is distortions that deter capital flows Recent movements in the rupee warrant attention, but not overreaction. Even after the sharp rise in energy prices, economists expect India’s current account deficit in FY27 to settle at around 2-2.5 per cent of gross domestic product (GDP). This is manageable by historical standards. The Reserve Bank of India (RBI) also holds foreign exchange reserves of around $580 billion net of forward foreign currency sales. However, there are important policy takeaways. India needs sustained net foreign capital inflows, which ultimately require growth and inno...

(This article appeared in Business Standard on 19th May 2026, link:  https://www.business-standard.com/opinion/columns/future-ready-market-regulation-needs-expertise-credibility-consultation-126051801680_1.html  ) Effective regulation requires consultation, expertise, incentives, and institutional credibility The draft Securities Market Code (SMC) consolidates and modernises the Securities Contracts (Regulation) Act, the Securities and Exchange Board of India (Sebi) Act, and the Depositories Act.   An ideal regulatory framework must mitigate Type I errors of market failures, while avoiding Type II errors of onerous regulations that constrain innovation and capital formation.   Balancing both objectives in increasingly complex markets requires transparent consultation, deep expertise, the right incentives, and institutional credibility.   Dialogue before regulation   Transparent consultation is essential for balanced regulation.   To Sebi’s credit, its ...