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How to import-save efficiently

It is feasible for India to correct its chronic current account deficit without compromising on efficiency. It desperately needs to be competitive, at the policy and firm level

Dhiraj Nayyar

Long before ISI became a dreaded acronym courtesy the notorious Inter-Services Intelligence of Pakistan, it was associated with a (failed) economic strategy practiced by India and several other developing countries: Import Substitution Industrialisation. Now, as India faces a large current account deficit and struggling exports, import saving (a politically correct alternative for ISI) is in vogue again. Can it work? The fact is that no country can live off imports alone. Even the theory of free trade proposes the notion of comparative advantage, not absolute advantage, as the basis ...