ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Preventing and Responding to the Crisis of 2018

Looking ahead, the big macroeconomic policy question for India is whether or not it should emphasise greater self-insurance with a necessarily more cautious approach to capital market integration. The serious adverse impact of the current crisis should awaken India to the need for effective self-insurance in the future. If self-insurance becomes an important policy objective, the government will need to revisit its macroeconomic policy, including exchange rate management and capital account convertibility. Self-insurance calls for countercyclical policy - dampening flows and keeping the currency competitive - so that reserves can be built up during good times.

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