India may need capital controls: Economist

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Mumbai, October 16:: bank has already raised banks' reserve requirements by 200 basis points to 7 percent since December.

"The stock market has gone virtually berserk," said Tarapore, who chaired a central bank-appointed panel last year which drew up a plan for more rupee convertibility on the capital account.

"The concern is whether the (benchmark index) would rise further or crash. Either way, it could have implications for capital flows and macroeconomic stability."

Further currency appreciation would widen the current account deficit to unsustainable levels and lead to a sudden exodus of capital, he said.