New Delhi, Oct. 11 -- For years, macroeconomic policymakers had a settled view of India's external financing strategy. A current-account deficit could be financed by capital inflows, principally foreign direct investment and portfolio investment. The flows could change in composition and timing or prove inconvenient, but they were a dependable source of dollars beyond doubt.

The past two years have seen a structural break. India's current-account deficit has remained well behaved. But capital inflows have not been sufficient. This has put pressure on the rupee.

The Reserve Bank of India (RBI) has had to search for dollars, including through expensive measures to attract subsidized foreign-currency deposits from non-residents, which are ...