``Though capital controls are a nuisance, in this transition phase they are necessary,'' he said. Ahluwalia also pointed out that in Indonesia, the moment the people knew the rupiah would slip anyone with real money took it out. In India that can't happen.

Realising the cushion offerred by capital controls, Russia and Malaysia have already announced their (controls) imposition and more and more countries are expected to follow suit thus defying the advice of the US and the IMF.

For better thana year, the journal noted, the treasury and the IMF have lectured shaken governments that the only prudent response to their financial crisis is to move more rapidly towards unfettered markets, for everything from cars to currency. And until recently these governments paid heed.

Now some of the affected countries are moving in the opposite direction, erecting new barriers to the free flow of money across border. Various prominent economists have also talked in favour of capital controls. Prominent economist professor, Jagdish Bhagwati in an article in `Foreign Affairs has said, "Wall streeters have obvious self interest in a world of free capital mobility, since it only enlarges the area in which to make money."

This is, however, not the concern of emerging market governments, he said adding," any nation contemplating the embrace of free capital markets must reckon with the costs and also consider the probability of running into a crisis."

Free trade in goods and services boosts living standards withoutquestion. But the case for free trade in currencies is not so clear. Indeed, capital flows are characterized by panics and manias, he said. World Bank, Chief Economist, Joseph Stilglitz is also in favour of some controls and has urged that controls should be considred, provided they can be designed to discourage short-term investments(bank loans or currency trades) without disrupting investment in factories and infrastructure.

Analysts here point out that though the current management of IMF under Michel Camedessus, backed by the US has been pressing for inclusion in the charter, abolition of all control on capital movements, the founders of IMF - John Maynard Keynes and Harry Dexter White were not against capital controls.

Keynes had said, "it is widely held that control on capital movements, both inward and outward, should be a permanent feature of the system." Stilglitz in a presentation on the Asian crisis at the Brookings Institution, a major think tank, said here yesterday that international flowsfor short-term capital may expose developing countries to "unnecessasry risks without commensurate returns'.

Stilglitz like a number of growing experts sees merit in efforts to control the inflow of shot term (easy come easy go) money, the journal noted.