To close trade gap, boost productivity

India's external finances are worsening: the current account deficit for the third quarter is 6.7% of GDP, a sharp spike from 5.4% in the previous quarter. The gap has widened because imports have grown even as exports are stagnant. To slow down imports — of which oil and gold are the two biggest components — the government should eliminate fuel subsidies and encourage savers to move into financial instruments like inflation-indexed sovereign bonds.

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