Bridging the deficit

Acurrent account deficit (CAD) amounting to 5.4 per cent of GDP during April-December of the current fiscal certainly reignites memories of the ‘balance of payments’ crisis that hit India in 1990-91. The current ratio is, in fact, even worse than the 3 per cent level recorded in that year. The crucial difference, though, is that in March 1991, the country had foreign exchanges reserves capable of financing just two-and-a-half months of imports, whereas today they can almost cover seven months.

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