Late revival of monsoon and steps taken/being planned to improve the supply responses should moderate the inflationary pressure overtime. Stronger fiscal measures on the path envisioned would pave the way for sustained recovery. We have seen marginal improvement in CAD. This should not, however, lull us into any complacency as the path to its sustainability requires several adjustments.
It is equally important that correctives now being put in place do not attenuate regulatory prudence or deflect the focus away from long term sustainability of the external sector by taking a short term view of the proposed solutions for improving capital flows.