Tiger’s tail not on fire

Tiger’s tail not on fire
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First Published: Sat, Jun 30 2007. 01 05 AM IST
Updated: Sat, Jun 30 2007. 01 05 AM IST
Two bits of new data on the Indian economy are a pleasant surprise.
The Reserve Bank of India said on Friday that the country had a current account surplus of $2.6 billion (Rs11,440 crore) in the fourth quarter of 2006-07. Meanwhile, the government said that the latest headline inflation rate is a tad more than 4%, which is well below its recent highs.
These numbers have been released after a long debate this year on whether the Indian economy is too hot for its own good—with rising inflation and a wide current account gap.
The external deficit in 2006-07 was $9.6 billion, moderate for a trillion-dollar economy and one flooded with foreign capital that can finance this deficit many times over.
And a pointer for another set of pessimists—it is worth asking why India’s current account has moved out of the red at a time when the rupee has gained strength.
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First Published: Sat, Jun 30 2007. 01 05 AM IST
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