Current Account Deficit Challenges India's Economy Essay

Current Account Deficit Challenges India's Economy Essay

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The current account deficit is one of major challenges that Indian economy is facing. It has pulled down the economy growth to 4.8% from average growth of 5.5%. The current account records the trade of goods and services of an economy with other countries of the world. It consists of net exchange i.e. exports minus imports of goods, net exchange of services and net transfers to and from the country. Balance of the account before calculating the transfers is also called as balance of trade.
X = Exports of goods and services
M = Imports of goods and services
I =Invisibles (net)
NMG=Non-monetary movement of gold
CAB = (X – M) + I+ NMT
So now we can define current account deficit which means if CAB holds a negative value whereas if CAB has a positive value it will be called as current account surplus. Practically current account deficit, also referred as CAD, means there is negative balance of trade. In Indian economy the CAD occurred because there are more imports than exports. While a current account deficit can be considered akin to a country living “outside of its means," having a current account deficit is not inherently bad. If a country uses external debt to finance investments that have a higher return than the interest rate on the debt, it can remain solvent while running a current account deficit. If a country is unlikely to cover current debt levels with future revenue streams, it may become insolvent.
At this stage, it was perceived that a CAD level of around 1.6 per cent of GDP was sustainable.
during 2011-12, CAD exceeded the level of 4.0 per cent of GDP and there has been net drawdown of reserves to the extent of about USD 13 billion. CAD began rising in the second ha...


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...ty and packaging requirement: Import of all the edible products like tea, domestic sales and manufacture of these products are included in this Act. These product need to comply with certain quality and packaging requirement mentioned under this Act.
ii. Shelf Life: The product mentioned under this act shall also be subject to the condition that, at the time of importation, the products are having a valid shelf life of not less than 60%. Of its original self-life. Self-life of the product is calculated on the basis of date of manufacturing and expiry date given at the back of the product or the label of the product
iii. Meat and Meat Products including Poultry products: There is certain condition which is required to meet in case of Import of meat and poultry products regarding manufacture, slaughter, packing, labeling and quality conditions as laid in the Act

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