Let me now turn to the Indian experience in managing the spillover from volatility in capital flows. Indian experience We have a deficit in the current account of our balance of payments (BoP). Hence, we are dependent on global financial markets to finance our current account deficit (CAD).
The impact of capital flow volatility on our economy can best be captured in a snapshot by looking at the movement in our foreign exchange reserves and the exchange rate (Chart 6). 4  Lane, Timothy (2012), “Financing commodities markets”, Remarks at the CFA Society of Calgary, Calgary, Alberta, 25 September 2012.