Despite the Covid-19 pandemic, India is expected to achieve current account surplus due to lower crude oil prices this fiscal, according to a SBI Ecowrap report on Monday.
According to the report, with capital flows turning positive as the economy slowly re-starts, it can mitigate some of the losses that we have seen. “Analysis of past crises shows currencies can swing wildly. However, they stabilise if the right measures are taken,” it said.
The current account shows the net difference between inflows and outflows of foreign currencies.
“What’s important is that we focus on improving macro-economic fundamentals and monitoring how the composition of our capital flows is changing, so that we are prepared when the investor sentiment turns negative.”
“The RBI has stated that a diversified capital account, with a hierarchical preference for FDI over debt flows, and for long-term flows over short-term flows, should be the focus of external sector policy,” it said.