Losing the balance

Last week, the RBI released the latest balance of payments data for India. This data highlights the grim economic situation faced by the country. Unless corrective steps are immediately taken, the problem could quickly turn into a bigger disaster. It could mean further rupee depreciation, stress on balance sheets of companies who have borrowed in dollars, a higher import bill, difficulties for banks whose clients have borrowed in dollars, higher inflation as the price of tradables rises, and capital flight from India.

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