Capital flows

Money moving across borders to buy assets, split between direct investment in businesses and portfolio investment in securities.

The distinction is about stability rather than size. Direct investment builds factories and cannot leave quickly; portfolio investment can reverse in days, and its reversal is what turns a current account deficit into a currency crisis.

For India the composition of the financing has therefore mattered more than the level of the deficit in every episode of currency stress.

Look at what is funding the gap, not just the gap.