An accident waiting to happen

At the very outset, I must confess having been unsuccessful in getting sensible answers to the following basic questions pertaining to India’s external macro-management: why did Indian policy makers allow the current account deficit (CAD) to widen to a record high of nearly four per cent of gross domestic product (GDP) when they consider the comfortable level at around 2.5 per cent? Additionally, why has the financing of CAD become more – not less – reliant on volatile capital inflows that are sensitive to shifting global risk appetite?

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