Context: Indian economy is vulnerable to a reversal of capital flows that might occur if the US Fed decides to tighten its monetary policy.
About Taper Tantrum:
Factors impacting the macroeconomic stability and economic growth of Emerging Markets and Developing Economies (EMDE):
Challenges with the EMDEs in averting the macroeconomic imbalances
Vulnerabilities of India in the light of possible taper tantrum:
Conclusion: For all these reasons, India is particularly vulnerable to the external shock of a rise in US interest rates and turn in the global financial cycle.