But if the US economy does recover faster than expected, liquidity will ease and there can be little doubt that, in the initial phase at least, funds flows to emerging markets like India will take a hit. Given how Indias current account deficit is so fragile, and is so vulnerable to global risk-on and risk-off moments, this puts an extra burden on Indias economy managers. Take the rupee, to begin with. Despite $24.4 billion of FII money flowing in during FY12, the rupee still fell from 51.3 to the dollar on January 1, 2012, to 54.6 on January 1, 2013. While the rupee has retraced a bit to 54.2 on February 12, keep in mind this is after $9.3 billion of inflows so far in the calendar yeararound 38% of what came in during 2012 has already come in during less than two months of 2013. In the case of India Inc, similarly, there has been a sharp rise in exposure to ECBsfrom around $41 billion at the end of FY07, this was up to around $104 billion at the end of FY12. In the case of companies like Bharat Petroleum, forex debt as a proportion of total debt rose from 18% to 88%it rose from 15% to 68% for Hindustan Petroleum and from 22% to 42% for Indian Oil in the same period. In other words, while global liquidity doesnt look like its going to choke off in a hurry, India would do well to keep in mind the implications of what could happen when it does.