Table of Contents
Current Account Deficit And Fiscal Account Deficit
- A twin deficit problem is where there is simultaneous increase in Fiscal Account Deficit and Current Account Deficit
- A Fiscal Deficit is a situation where Government Expenditure is more than its Revenue.
- When the outflow of money on account of imports is morethan the inflow of money on account of exports, the situation that arises is Current account Deficit.
Import > Export
Impact on Indian Economy
- It will reduce the money available for private investment which will ultimately impact the growth level
- A higher CAD will weaken the rupee which will further impact the import bill.
Measures the government should take,
- Cut down its expenditure
- Promoting domestic manufacturing to reduce reliance on imports
- Improve exports by exploring new markets and easing of the duties.
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