The nervousness is back, and so are direct physical controls. In an otherwise staid monetary policy document released on 3 February 2015, Reserve Bank of India governor Raghuram Rajan has inserted one small restriction: henceforth all foreign portfolio investors investing in debt instruments—issued by government or private sector companies—have to hold on to their investments for a minimum of three years.
The policy decision is a discreet admission of the risks confronting the Indian economy, as well as a hint of the Indian central bank’s anxieties.