The backdrop for the tariff hikes is the ongoing widening of the current account deficit as well as the recent depreciation of the rupee. While markets for assets might move with sentiment, the current account responds to fundamentals of the economy, not sentiment. So, this is unlikely to provide any balm to the current account deficit. The current account deficit has been trending upwards for the past four years with periodic gyrations around that upward trend. The government and the bureaucracy would be well advised to focus on those instead of ferreting out retrograde protectionary moves from a discredited playbook.
Source: Indian Express October 11, 2018 20:21 UTC