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Sunday, July 14, 2013

India's current account balance to be the worst.

The steep slide of the rupee against the dollar has wreaked havoc on India's current account balance. Little wonder then that when compared to its peers, India is expected to have to worst current account deficit in 2013 as per estimates by the Economist. The primary reason for the deficit has been imports rising at a faster pace than exports. Large part of the import basket comprises oil and gold. And because the demand for this has not waned, the import bill has continued to increase. The fall of the rupee, thus, has only compounded the country's woes. Exports meanwhile have not really taken off at a spectacular pace and the weak global macroeconomic environment has only made matters worse. In this regard, the depreciation of the rupee should provide some relief. But from a longer term perspective, if more steps are taken to increase India's energy security and make exports more competitive, it will considerably ease quite a lot of pain on this front.

 
               
                                                                                        Data Source: The Economist
                                                     

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