It is based on the fact that the sum of the budget deficit, the capital inflow to finance the trade deficit, and the difference between domestic saving and domestic investment equals zero.

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Consumers have tapped into home equity and cut back saving to virtually nothing in order to finance their continued spending.

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The result of robust exports and weak imports linked to anemic domestic spending is its perennial current account surpluses, which, along with earlier high saving by households and now by businesses, allow it to finance its huge government deficits internally, with foreigners owning only 5%.

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The later would reduce imports, increase exports, and, by improving our balance of payments reduce our reliance on foreign saving to finance domestic investments.

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Another impediment to rapid growth is India's saving rate of 24%, only half China's rate and too low to finance the required investment in industry and infrastructure.

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