Managing trade imbalance

09 AUG,2022 | MEDC


India needs targeted policy intervention at various levels to contain the fallout of the rising global economic uncertainty. The current account deficit (CAD) is expected to be over 3% of the GDP this year. While that figure per se is not particularly alarming, what is disconcerting is the uncertainty in the capital account. Capital flows are likely to remain under pressure due to the prevailing global economic and financial conditions. The relative strength of the rupee affects India's international competitiveness, and that could complicate matters. RBI has been intervening aggressively in the market to contain the volatility of the rupee, but that cannot be a long-term solution to address our trade woes. India needs a more pragmatic trade policy to boost exports sustainably. That will not only improve our trade balance, but also help promote domestic economic growth.

*Picture Credit:Google 

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