Exports alone will keep us afloat

The Budget (FY14) has recognised the rising current account deficit (at 4.6 per cent of GDP in FY12) as the biggest threat to India’s macro-economic stability. Given the inelastic nature of India’s major imports (e.g. crude, coal, edible oil and fertilisers) and the insatiable demand for gold, the long-term solution to the problem of CAD lies in attracting foreign investment or increasing exports.

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