Warnings on the external account: CAD could expand to 2013 levels

The government's approach to the crucial exports sector has been alternately backward-looking and coercive

The government has repeatedly argued that among its major achievements is moving India out of the “fragile five” economies identified during the “taper tantrum” of the summer of 2013, when India’s current account deficit (CAD), in particular, hit dangerously unsustainable levels. However, the government managed, especially through curbs on gold imports, to bring down the CAD to 1.7 per cent of gross domestic product (GDP) in the full financial year 2013-14, as opposed to 4.8 per cent of GDP in 2012-13. Since then, the CAD has shrunk further, going down to 0.7 per cent of GDP in 2016-17. Yet, in