FY21 to end with current account surplus, says CEA

Our Bureau New Delhi | Updated on November 23, 2020

Chief Economic Advisor KV Subramanian   -  SHIV KUMAR PUSHPAKAR

India is likely to post current account surplus in the current financial year, Chief Economic Advisor KV Subramanian said on Monday.

Current account surplus means more earning in dollar than expenditure. Surplus will be possible as there is moderation in import due to under heating of the economy triggered by the Covid-19 crisis.

Taper tantrum phenomenon refers to the 2013 collective reactionary response that triggered a spike in US treasury yields, after investors learned that the US Fed was slowly putting brakes on its quantitative easing (QE) programme. This led to a surge in inflation to high double digits emerging economies.

In contrast, he said, the Covid crisis is different and India identified the nature of this crisis and treated it differently from other economic crises of the past.

Noting that the Covid crisis is primarily a negative shock to demand, Subramanian said India’s response was suitably crafted to deal with that.

“And that is in fact if you can see is reflected in the fact that, this year we may be having a current account surplus. We had almost $20-billion current account surplus in Q1... $19.8 billion to be precise. Even if let’s say subsequent quarters do not see that kind of performance, we still will likely have a current account surplus...,” he said.

Published on November 23, 2020

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