As per National Council of Applied Economic Research (NCAER), Indian economy is in a crisis with growth slowing down, fiscal and current account deficits (CAD) running high amid persistent inflation. NCARE study said that persistent increase in deficits will lead to macroeconomic risk as it raises concerns about the economy's ability to credit its external payments obligations and also affects the confidence of potential lenders and investors.
India's Current Account Deficit (CAD) widened to a record 6.7 percent in the third quarter of FY13. Attributing high CAD to GDP ratio, increase in imports of oil, coal and gold; slowdown in exports, India's premier economic research institution NCAER said that there is a need to boost exports as high CAD requires high foreign investment to lower the deficit on balance of trade.
By adding further, NCAER said that manufacturing in several sectors of production in India is still not internationally competitive. So, there is a need to pay attention on long-term factors including infrastructure, labour laws and governance reforms and goods and services tax (GST), which would add to India's global competitiveness in manufactured goods.
On the trade integration with other Asian nations, it noted that India should play a pro-active role in strengthening its bilateral trade integration with other Asian nations as country's trade and investment relations with Asia will play a major role in boosting its exports in the Asian century.
