Tackling Current Account Deficit in India

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  • Topic: Balance of payments, Current account, Balance of trade
  • Pages : 19 (6098 words )
  • Download(s) : 231
  • Published : April 11, 2013
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TACKLING CURRENT ACCOUNT DEFICIT IN INDIA

INTRODUCTION
There has been a sharp increase in the Current Account Deficit in Indian economy. In previous years the current account deficit increased moderate rate but in the fiscal year of 2011-12 there was sharp increase in current account deficit, marking a rise to nearly 4.2 per cent of GDP. High current account deficit has always posed serious implications for an economy and therefore for India it is a matter of concern. This research paper deals with the impact of current account deficit on the Indian economy and analyzes the causes and measures to tackle current account deficit. The researcher has studies the current account deficit. This research paper has been divided into 5 sections. The first section deals with questions such as what is current account, causes and cures of CAD. The second section the researcher has tries to provide reasons and major facotrs which lead to increasing deficit in India. In the third section provides current account deficit for the past three years and the present situation of India’s current account. The fourth section talks about the measures which can correct the problem of current account deficit in India. In the fifth section the study the government measures and what government can do and what the government is doing to tackle it and consider the various programmes and various schemes and policy that government has come up with has been described.

NATIONAL LAW SCHOOL OF INDIA UNIVERSITY

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TACKLING CURRENT ACCOUNT DEFICIT IN INDIA

Table of Contents
Introduction ................................................................................................................................ 1 Chapter- 1 -What is Current Account Deficit? .......................................................................... 3 Causes and cures of CAD ...................................................................................................... 4 Chapter – 2 –Current Account Deficit in India .......................................................................... 8 Chapter- 3 - Causes of CAD in India ....................................................................................... 14 Chapter – 4 – How to tackle CAD in India? ............................................................................ 16 Chapter- 5 - Government measures ......................................................................................... 18 Conclusion ............................................................................................................................... 20 Bibliography ............................................................................................................................ 21

NATIONAL LAW SCHOOL OF INDIA UNIVERSITY

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TACKLING CURRENT ACCOUNT DEFICIT IN INDIA

CHAPTER- 1 -WHAT IS CURRENT ACCOUNT DEFICIT?
Current account is one of the components of Balance of Payment (BOP). Kindle Berger defined BOP as, “The balance of payment of a country is a systematic record of all economic transactions between its residents and resident of foreign countries.” BOP is broadly comprises of current account and capital account. 1 In this paper the researcher has focused on current account. Current account include following transaction Export and import of goods - when one country exports it result in flow of foreign exchange into the country and when imports flow of foreign exchange out of the country. Balance on account of export and import of goods is balance of visible trade.2   Export and import of services– balance occurring on account of export and import of services is termed as balance of invisible of trade. 3 Invisibles – unilateral transfers such as grants, gifts, donations which do not have any quid pro quo.4 Current account balance = Balance of visible trade + balance of invisible trade + invisibles And Current Account Deficit (hereinafter referred as “CAD”) occurs when...
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