Plugging India’s current account gap

Over the last two years, the Reserve Bank has been drawing attention to the widening current account deficit (CAD) in our BoP. The risks to our BoP have increased both in the global and domestic context: first, following the global financial crisis trade volumes have slumped and capital flows have become volatile; second, slowing domestic growth coupled with a large fiscal deficit alongside a high CAD poses twin deficit risks.

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