Oct 06, 2024
Oct 06, 2024
It is important to note that the emergence of a CAD implies that the “non-(X-M)” items, even if they happen to be net positive inflows of foreign exchange, have been unable to reverse the negative trade deficit. For example, RBI data reveals that in 2011-12, (X-M) equaled (-) Rs. 9,121 bn, while the CAD was (-) Rs. 3,760 bn. The non-(X-M) items were helping therefore, though only partially, to wipe out the trade deficit.(1) foreign exchange inflows associated with foreign investments (incomes to Indians from their foreign investments net of payments to foreigners for their investments in India),
(2) net invisible inflows (such as tourist expenditures) and
(3) net transfers (which are purely in the nature of foreigners’ gifts to India net of India’s gifts to foreigners).
04-Apr-2013
More by : Dipankar Dasgupta