Sub Heading: India needs to do what Roosevelt did in 1933 and bring Gold Bonds rather than India Bonds in its hunger for dollars
Behind every symptom, there is a disease. And behind disease, like, say, cardiac complications, there is a cause, which is either embedded in the DNA or picked up by choice—be it smoking, or excessive drinking and eating. The drastic fall in the price of the rupee in relation to the US dollar, as we are witnessing now, is a symptom. The disease has been diagnosed by experts as current account deficit, which is the gap between what we earn in dollars by way of goods, services and transfers, and what we pay under these heads, again by dollar. But the current account deficit, or CAD, though still high, is responding to controls. From a scary 7 per cent of the GDP last year, it is poised to settle for 4.5 per cent by March next. So what exactly is the disease?