ABSTRACT
The chapter deals with the trilemma faced by the two countries in course of the opening of the capital account and the urge for managing the exchange rate which negates the goal of an autonomous monetary policy in both. It points out the contrast between fiscal management policies in the two countries, with policies for austerity in India which did not prevail for China. The chapter also deals with the destabilising and growth retarding flows of portfolio capital, especially in India. The chapter closely follows the Post Keynesian frame of analysis.
