- India’s external deficit is 5% of the GDP in 2012-13 compared to 2.8% in 2008-09
- A large current-account deficit is a classic symptom of a pre-crisis economy living beyond its means – in effect, investing more than it is saving.
- This is where QE comes into play. It provides the means in terms of foreign investments to live a lavish life and to keep spending more.
- The emerging markets including India have high interest rates, there by attracting foreign investors.