Concern over current account deficit

Contact Counsellor

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