'We don’t want Indian economy to be controlled by...': Top finmin official on hot money

India’s inclusion into JPMorgan Chase & Co.’s emerging index is likely to bring a gush of foreign inflows, but the country is prepared for that kind of volatility, said finance secretary TV Somanathan in an interview. 

“Anything that would be enough to create domestic volatility will be monitored. The government will take whatever action is needed to prevent hot money from coming in," the top official told Bloomberg in an interview. 

India's $1 trillion bond market is likely to get about $40 billion of inflows on inclusion, according to some estimates.

Inflows have already started coming in ahead of June inclusion. Overseas investors have plowed  over $6 billion into the index-eligible debt since the inclusion announcement in September. HSBC Asset Management sees India’s bonds getting $100 billion of inflows in the coming years.

“We don’t want the Indian economy to be controlled by unknown foreign factors, which we have no control over,” Somanathan said. “Domestic control of macro economic parameters is a key policy focus for us.”

Somanathan also hit back at rating companies for not considering an upgrade despite India’s plan to rein in its budget deficit to 5.1% of the gross domestic product.