Capital control only for short-term: Reddy

Former RBI governor YV Reddy has said capital controls, if imposed, should be for the short-term although it is difficult to define what a short-term is.

"Capital controls may be useful in the short-term, but it is not clear how long the short-term should be," said Mr Reddy, who was speaking at the BMA event.

As far as India is concerned, it needs to define its relation with the world and should debate how to do it. On policy stimulus, by authorities following the crisis, Mr Reddy said one should seriously look at how quickly and smoothly it should be unwound.

The former governor also called for synchronised regulatory and tax reforms at the global level to discourage arbitrage by investors in the wake of the recent global financial crisis.

Flagging of various issues of regulatory relevance, he said with globalisation of finance, the need for reforming regulatory framework and tax regime is well recognised, but they need to be well synchronised in order to prevent regulatory arbitrage.