‘’My guess is that large repatriations are due to selling by PE funds and this problem will become worse if India prefers PE over FII funds. If PE funds invest $50 billion now, they will expect to take out $100 billion in approximately seven years and so on till it becomes unsustainable,” said Arora.

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Better to attract real FDI money (which only takes out dividends of two per cent per annum and reinvests the balance) or FII (which broadly remains invested over time and even redemptions are not bunched too much on general), suggested Arora.

He added that attracting FII money requires the least amount of effort or policy changes, as it just requires the relaxation of capital gains tax. That will also help domestic investors, attract risk-taking money, allow the government to raise good money from PSU divestments, and collect money from higher STT collections.

To this proposal, Mantri responded, ‘’This is a narrow and self-serving approach. Everybody wants a tax holiday for themselves, but of course somebody has to make good the overall revenues of the government. Who will bear the burden?”

Mantri returned, asking ‘’why secondary market traders or investors should receive a capital gains tax holiday”. ‘’What share of investment by FIIs actually goes into the hands of a company? And they should effectively receive a freebie by way of a tax holiday? No,” said Mantri in his post on ‘X’.