Along with stable form of capital flows such as FDI that come with relatively long-lasting interest in domestic entities, foreign portfolio (both equity and debt) capital flows have also increased making the economy (like that of other open emerging markets) susceptible to enhanced volatility and sudden stop or reversal risks. 9.
Therefore, as India – like other emerging markets – has undoubtedly benefited from globalisation, we are also more exposed than before to vulnerabilities that come in its wake.