Analysis of India’s Current Account (1991-2013)
61 Pages Posted: 18 Nov 2013
Date Written: November 16, 2013
Abstract
India's Current Account has been impacted by several shocks and events over the last few decades. The country weathered a series of crises, including the devaluation of the rupee in 1966, oil shocks in 1973 and 1980, external payments crisis of 1991, the East Asian crisis of 1997, and the global financial crisis of 2008. The recent discussions on the macro-economic risks to the Indian economy have once again come to fore as India battles with a widening current account imbalance, which is further adding pressure on the rupee. This paper presents an analysis of India’s Current Account from 1991-2013. We took major components of India’s Import Bill like Crude Oil, Gold, etc., Components of Government Policies like Government Expenditure, FDI, Fiscal Deficit, etc., Components of RBI Policies Like Repo Rate, CRR, SLR, etc. and some Socio-Economic Factors. We used Correlation matrix analysis, Econometric Regression Model, Statistic test & Granger causality test to analyze the relations of different explanatory variables with Current Account and tried to find out which variable is affecting the Current Account the most, which will give us the reasons behind the recent India’s Current Account Deficit Widening.
Keywords: India, Current, Account, Widening, Correlation Matrix, Econometric Regression Model, Granger Causality Test, Crime, Corruption, Inflation
Suggested Citation: Suggested Citation