Steering between two extremes

Abstract

India’s current account deficit has jumped to over 4% of gross domestic product (GDP) by some estimates, the highest since Independence. At the same time, the rupee has risen in real (i.e., inflation-adjusted) terms over the last few months, going by the real effective exchange rate (REER) index calculated by the Reserve Bank of India (RBI). The previous biggest external deficits were during the crisis of 1991 (3%) and in 1957 (3.2%) due to the Mahalanobis plan, when policy veered leftward, as Mathew Joseph has pointed out in an article suggestively titled “RBI should act on the exchange rate front" (The Hindu Business Line, 19 April). Read more at: https://www.livemint.com/Opinion/NJKW2U2QUNjMxbQH564UYO/Steering-between-two-extremes.html