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What is Twin deficit? – Know all about in Twin deficit – Indian Economy – Free PDF

Current Account Deficit  And Fiscal Account Deficit

  • A twin deficit problem is where there is simultaneous increase in Fiscal Account Deficit and Current Account Deficit
  • A Fiscal Deficit is a situation where Government Expenditure is more than its Revenue.
  • When the outflow of money on account of imports is morethan the inflow of money on account of exports, the situation that arises is Current account Deficit.

Import > Export

Impact on Indian Economy

  • It will reduce the money available for private investment which will ultimately impact the growth level
  • A higher CAD will weaken the rupee which will further impact the import bill.

Measures the government should take,

  • Cut down its expenditure
  • Promoting domestic manufacturing to reduce reliance on imports
  • Improve exports by exploring new markets and easing of the duties.

Indian Economy | Free PDF

 

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