Puzzled by CEA celebrating current account surplus, says P Chidambaram

We're a developing country in need of capital, we can't celebrate a current account surplus. A current account surplus means India, a country that needs more capital, is investing its capital abroad! Our policies should ensure that both exports and imports grow smartly leaving a manageable current account deficit -P Chidambaram, former FM

New Delhi: Former Finance Minister P. Chidambaram has said he is 'puzzled' by Chief Economic Adviser KV Subramanian celebrating the current account surplus. India may witness a current account surplus due to the recent economic reforms announced by the government, said Subramanian. Reacting to the CEA statement, Chidambaram said, "CEA has confirmed my suspicion that India will end 2020-21 with a current account surplus. But I am puzzled by the tone of his remarks. Is the CEA celebrating a current account surplus?"

"Given that we are a developing country in need of capital, we cannot celebrate a current account surplus," he added. Chidabaram said many economists have pointed out, a current account surplus means that India, a country that needs more capital, is investing its capital abroad! "Our policies should ensure that both exports and imports grow smartly leaving a manageable current account deficit," the former Finance Minister said.

Speaking at CII's MNCs Conference 2020 on Monday, the CEA had said that the implementation of the labour law reforms has eased compliance burden by way of increased thresholds, change of MSME definition and easier retrenchment norms. "Owing to the economic reforms measures by the government, the Indian economy may witness a Current Account Surplus despite battling the Covid-19 crisis," he said

The government has taken up several market liberalising measures, including enhancing FDI limits in defence, commercialising coal mining, labour law reforms among others as part of the economic packages announced to support the economy amid the pandemic. Subramanian on Monday also said that the intent of the reforms, including the RERA, employment among others is for formalisation of the economy. "Macroeconomic configuration is being changed to employment-intensive sectors for sustained growth," the CEA said.