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The capital inflow into India is the gap between investment and savings. In the coming one to two years, large changes in both investment and savings are likely. There is a reasonable probability of a large increase in the current account deficit. It would be prudent to remove the policy thicket that hinders Indian financial engagement with the world.
The accounting identity from macroeconomics
The current account deficit (CAD), i.e. the capital inflow into India, is the gap between domestic investment (I) and domestic savings (S). If we invest Rs 35 in India, and we save Rs 30, the gap
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