Topic Balance of Payments

Understanding the Shift from Trade-Led Stability to Structural External Vulnerability Imagine showing two economists the same set of numbers. The first economist is from the early years of India’s economic liberalisation. The second belongs to today. Both see that India…

The Quiet Shift in India’s Development Philosophy For much of India’s post-liberalisation journey, economic development was viewed primarily as a financing challenge. Like many developing economies, India possessed ambitious investment needs but relatively limited domestic savings. Building roads, ports, factories,…

Why India’s Trade Deficit Is Only Half the Story Every few months, headlines warn that India’s imports have once again exceeded its exports. The implication is usually the same. A country that continuously spends more foreign exchange on imports than…

When the Exchange Rate Changed Its Job For decades, economists viewed the exchange rate as one of the most powerful tools for improving a country’s export competitiveness. The logic appeared straightforward. If a country’s currency weakened, its exports became cheaper…

For decades, economists viewed a country’s external sector through a relatively simple lens. A nation exported goods and services, imported what it could not produce, borrowed or attracted foreign capital when imports exceeded exports, and relied on its central bank…

Every household knows that spending more than it earns cannot continue forever. It is tempting to think countries work the same way. If imports exceed exports, the solution appears obvious: buy less from the world, sell more to it, and…