Rising Current Account Deficit is best bridged through higher exports, rather than Foreign Direct Investment flows. Explain (200 Words)
Refer - Business Line
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K. V. A 2 years
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IAS Parliament 2 years
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IAS Parliament 2 years
KEY POINTS
· India’s current account deficit (CAD) was just 1.2 per cent of GDP despite imports of both goods and services reaching record levels, of $613 billion and $147 billion, respectively.
· However, during first half of FY23, India’s external sector was in less well off, with a 96 per cent year-on-year surge in merchandise trade deficit at $148 billion
· It can be argued that the increase in imports that caused the widening of trade deficit was inevitable due to sharp rise in crude oil prices following Russia’s invasion of Ukraine.
· Though not an immediate source of concern, persistent slow growth of services exports could hasten India’s rapidly deteriorating balance of goods and services trade.
· CAD is likely to worsen further as the deficit of trade in goods and services, its largest component, had increased from $37 billion at the end of Q1 2022-23 to $63 billion within the next two months.
· In 2021-22, while gross FDI inflows into India were $84.8 billion, disinvestment, or repatriation of FDI was $28.6 billion; in other words, net inflows were $56.2 billion.
· The RBI informs us that during 2021-22, outflows on account of direct investment income, or dividends and other forms of income that foreign direct investors extract from the country, totalled $37 billion.
R K PRADEEP 2 years
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IAS Parliament 2 years
Need better understanding, try to bring coherence in the answer and use data to support your arguments. Keep Writing.
PANDI SANTHOSH RAJA S 2 years
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Good attempt. Keep Writing.
Sivasurya 2 years
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IAS Parliament 2 years
Try to bring coherence in the anser, interlinkthe points written in logical manner and avoid using short forms frequnetly. Keep Writing.
