Explanation:

• Macroeconomic Vulnerability Index, as mentioned in the Mid-Year Economic Analysis 2014-2015,released by Ministry of Finance, adds together the rate of inflation, current account deficit and fiscal deficit of a country. The Index value can be compared across countries for different time periods to gauge their relative vulnerability. The ministry has done a comparison of the “fragile five" countries—Brazil, India, Indonesia, South Africa and Turkey.
• According to the data, in the beginning of 2013, India was on top of the list with an Index value of 22.4. The current account deficit was at 4.7% of the gross domestic product (GDP), inflation at 10.2% and budget deficit at 7.5% of GDP. For the purpose of comparison, the ministry has taken data from the World Economic Outlook of the International Monetary Fund. Though India’s macroeconomic vulnerability has come down, it still needs to be watchful, noted the mid-year analysis.
• India still needs to be watchful in terms of its macro-economic fundamentals.
• The value of the index currently is well above 15 (recognizing that a value below 12—say 4% inflation, 2% CAD, and 6% fiscal deficit—is perhaps safer macroeconomic territory)