India’s current account deficit reached an alarming $90 billion or 4.8% of our GDP in financial year 2013 – an increase from just 1.3% in 2008, the year of the global financial crisis. This is an acute concern for both economists and markets, as is the social and economic fallout of the Food Security Bill, the Companies Act and its CSR commitments, and the Land Acquisition Act. With the rupee in a free fall, and foreign exchange reserves now depleted to $265 billion – less than six months of imports – there is now talk of India facing a Balance of Payments crisis and even, perhaps, bankruptcy. How vulnerable is India really to a 1991-style Balance of Payments crisis? What will be impact of rising interest rates on growth and the banking system? How can the government balance the politics of elections with the fiscal austerity required? What will be the impact and signals of anti-reform measures such as import or capital controls?
On September 6, Gateway House hosted Dr. Rajiv Kumar, Senior Fellow, Centre for Policy Research, and author, The Long View From Delhi, in discussion with Suresh Prabhu, former Union Minister of Power, India, to evaluate the severity of the current situation and the policy measures that have been – or should be – taken by the RBI and the Finance Ministry.
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