Though RBI has said the CAD is fragile, how fragile is not well appreciated. Nor is the high 5.4% CAD due to high gold imports—indeed, CAD soared even while both gold imports as well as non-oil imports slowed. Apart from the exports and services contraction, the single-biggest factor was the sharp rise in repatriation of profits on investments and interest payments of FII/ECB debt. Given that all 3 added up to $7.8 billion in Q2 FY13, this means India needs so much FDI just to keep the FDI balance at zero. And with FDI inflows just financing a fourth of CAD, as compared to 100%-plus in just FY08, this makes India very vulnerable to external flows. Add to this the rise in corporate exposure to ECBs—$104 billion at the end of FY12 as compared to $41 billion at the end of FY07—and the rise in FII investment limits in the bond market, and the vulnerability gets magnified. That, of course, is the reason behind the FM’s global roadshows and it’s also the reason why GAAR was postponed and why, eventually, a solution will be found to the Vodafone retrospective tax amendment.