India has drawn dollars in bulk but faces a policy quadrilemma—one that involves asset values too
FCNR-B inflows buy India some time, but structurally restoring long-term capital flows is key. India’s current account deficit, the cause of our balance-of-payment discomfort, was seen as ‘ideal’ at around 1-2% of GDP, but today seems less manageable. A rupee slide aiding exports is a possibility, but on current evidence, its more of a hope than a plausible outcome.
