Analysis of India's Current Account (1991-2013)

One of the major indicators of a country's external performance is its current account. A Current Account Deficit decreases country's net foreign assets by the corresponding amount. 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. 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. We used Correlation matrix analysis, Econometric Regression Model, Statistic test & Granger causality test to analyze the relations of different explanatory variables with Current Account & 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.