Credit policy documents in the 1970s, 80s, 90s – no reference to external situation. •  That has changed in a fundamental way. •  Because of India’s integration, external developments impact our domestic macroeconomic situation in complex, uncertain and capricious ways. •  Now in making our policy, we need to take external developments into account.
Our policy documents contain an important section on global developments. Example 1: great exit •  Prospect of the Great Exit – US Fed tapering off its QE  •  If you analyse – Fed did not say anything new. But markets reacted. •  Managing globalization means we need to understand how market participants react to global developments.