A savings, investment mismatch

The current account deficit (CAD) has been a standard feature of the Indian economy since independence, with very few exceptions. Its safety limit, if one may say so, has been estimated at 2.5-3% of nominal gross domestic product (GDP). That ceiling has been breached now, with CAD being placed at about 5% of GDP. The merchandise trade deficit is, and has been in most years, the major component of CAD.

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