How can we reduce current account deficit?
Attract more foreign investment. Increase exports. Decrease unnecessary imports.
How to control current account deficit upsc?
Devaluing the domestic currency. Reduction in the export subsidy. Adopting suitable policies which attract greater FDI and more funds from FIls.
What causes deficit in current account?
A current account deficit (CAD) arises when a nation’s total import value is more than its total export value. It signifies that an economy buys more from other nations, making its spending exceed the income it generates from selling its products and services to the rest of the countries.
Why is it important to reduce current account deficit?
The current account deficit is an important signal of competitiveness and the level of imports and exports. A large current account deficit usually implies some kind of imbalance in the economy, which needs correcting with a depreciation in the exchange rate and / or improved competitiveness over time.
Which of the following steps can improve the situation of current account deficit?
The Current Account Deficit could be reduced by boosting exports and curbing non-essential imports such as gold, mobiles, and electronics.
What are three ways to lower the deficit that the government can do?
Cut government spending. Increase tax. Achieve faster economic growth.
How does FDI reduce current account deficit?
So an increase in investment, saving remaining the same, reduces the current account surpluses. Therefore, an increase in the inflow of FDI may induce more investment in the domestic economy and thereby worsen the current account.
Which of the above can help in reducing the current account deficit?
Detailed Solution. The correct answer is Option 1, i.e Currency Devaluation. Currency devaluation can help to reduce the current account deficit.
Why India has current account deficit?
With depreciating rupee, the imports gets costlier, therefore, for a country like India, which imports costly items and commodities like crude oil, semiconductors and electronic goods, the burden on the exchequer is rising and this is pushing the current account deficit higher.
What is India’s current account deficit?
current account deficit: India’s current account deficit for FY23 likely to be at 3%, says SBI report – The Economic Times.