Concern over current account deficit

• In its latest review of the economy encompassing the period from June till July 10, the Finance Ministry is sanguine about India’s economic recovery and has asserted that major macro-economic risks have subsided over the past six weeks.

Economic Status of India

• Despite excise duty cuts on petrol and diesel GST collection and taxes levied helped
• Industrial metal prices slipping to 16-month lows,
• Prices for some food items falling off their peaks
• Crude oil prices descending
• Costlier imports and tepid exports on the merchandise account

Causes of Economic Destabilization

• Tightening of monetary policies by the U.S. Federal Reserve
• Dip in asset market
• Persistent geopolitical strife

Measures for Relief

• Interest rate hikes and measures to curtail the outflow of dollars by the central ban
• Imposition of windfall taxes
• Imposition of higher import duties on forex-drainers like gold

Way Forward

• Review its fiscal capacity
• Adopt measures to stimulate growth
• Mitigate the detrimental effects of high inflation