Borrowing our way into trouble

To reduce current account deficit, govt should have focused on narrowing the trade imbalance via export facilitation and linked FDI

The deteriorating trend of the current account deficit has been known for some time. But the government reacted only when the fall in the rupee value hit the headlines, possibly because it was concerned about the political fallout in an election year and had to be seen to be doing something. Last week, it announced some measures. These measures will be touted as a success if the rupee exchange rate fall is arrested.

The view of many economists is that the rupee should be allowed to find its own level so that the impact of the rupee depreciation in stimulating exports