'We don't want the Indian economy to be controlled': Top Finmin official on hot money

JPMorgan Chase & Co. India's inclusion in the emerging index will bring in foreign inflows, but the country is prepared for that kind of volatility, Finance Secretary DV Somanathan said in an interview.

„Anything that is sufficient to create volatility domestically will be monitored. The government will take all necessary measures to prevent the inflow of hot money,” a top official told Bloomberg in an interview.

According to some estimates, India's $1 trillion bond market is likely to receive about $40 billion in inflows.

It started arriving before June. Foreign investors have plowed more than $6 billion into index-eligible debt since the announcement in September. HSBC Asset Management sees India's bonds receiving inflows of $100 billion in the coming years.

„We don't want the Indian economy to be controlled by unknown foreign factors over which we have no control,” Somanathan said. „Domestic control of macroeconomic parameters is a key policy focus for us.”

Somanathan also hit out at rating agencies for not considering an upgrade despite plans to curb India's budget deficit to 5.1% of GDP.

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