Expert Zone
Straight from the Specialists
India’s current account deficit: solution lies in exports
(Any opinions expressed here are those of the author and not of Thomson Reuters)
The U.S. dollar is the major currency for international trade. Most countries use it to pay for their imports and also peg the dollar for exporting products and services.
The balance of trade (net import or export) would determine if a country is a net payer or a receiver of dollars. Trade, along with other dollar inflows (portfolio/FII, FDI, inward remittances), determines the overall availability of the international currency for a country to engage itself in the global economy. This also has a bearing on determining the exchange rate of a country’s own currency with that of the dollar.
An account that keeps a tab on the dollar expenses and dollar inflows for a period (normally an accounting year) is commonly known as the ‘current account’. A negative balance amounts to current account deficit (CAD), indicating broadly that the country’s imports exceed exports.
India has been persistently running a CAD. The deficit has widened in recent years as a percentage of GDP and has become a concern for policymakers, economists and global investors.
Investment boost needed to break India’s vicious cycle
(Any opinions expressed here are those of the author and not necessarily of Reuters)
The current account balance reported last month hammered in the fact that India is spending more than it saves. While it had been stubbornly in the red for all but a couple of years in the last two decades, reaching a record deficit in both absolute terms and in relation to the gross domestic product was sobering.
Concerns about current account deficit
(Any opinions expressed here are those of the author, and not those of Thomson Reuters)
The current account deficit (CAD) which touched 5.4 percent of the GDP is a matter of deep concern. It is well beyond the 3 percent danger mark which was crossed more than 18 months back and caused the rupee to depreciate.
Foreign borrowing or foreign investment?
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The market’s response to the currency measures announced on Monday was a dip in the Sensex. Much was expected after the announcement made over the weekend by the finance minister. What has been actually initiated cannot make much difference either to the rupee or to growth.
Budget FY 2012: A neutral event
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The FY 2012 Union Budget is largely a neutral event:
The Budget provides incentives for increased infrastructure spending along with increased funding sources while highlighting supply side issues in agriculture with an effort to provide solutions.
