........Take the RBI’s latest Annual Report, which repeatedly warns of the risks emanating from the twin deficits, while claiming the CAD to have widened “due to impact of large government spending on aggregate demand”. And like all gospel truths, this one, too, requires no evidence! It is nobody’s case that CADs are good or governments (for that matter, even households and firms) must live beyond their means. But building dubious theories around them does no good to the pristine discipline of economics.
Read - HBL
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