Over the last few years, India has experienced increasingly large current-account surpluses, with an all-time high this year of 1.4 percent of GDP. Yet, despite the fact that domestic savings are sufficient to meet the country's own investment needs, much of this surplus is simply being reinvested in U.S. Treasury securities. Why is India following such a counterintuitive strategy? A surplus on the current account, which measures the amount of money flowing into and out of a certain coutury from international trade, certainly looks at first sight like a sign of economic health. Yet, a number of experts have been warning that these surpluses are far from being a sign of the strength of the Indian economy.    Large current-account surpluses, leading to bloated foreign-exchange reserves, are hardly a new phenomenon in Asian economies. This is partly because many countries in the region are aggressive exporters, and thus keep their currencies artificially low in order to maintain their international competitiveness. China, for example, which runs an enormous trade surplus with the United States, has been accused of undervaluing the yuan by maintaining a fixed exchange rate. In fact, it is not uncommon for the achievement of a trade surplus to be an explicit policy goal of governments in Asia.     India, however, has not shared this fixation with exports. In fact, almost nine-tenths of India's GDP is consumed domestically, while, in terms of tangible goods, its export competitiveness has actually deteriorated, largely because of a rise in the rupee. It is rather the successful export of “invisibles,” notably software services, that has created the large current-account surpluses, together with the remittances of Indians who work abroad. But the fact that a developing country like India has these surpluses at all is actually an indication that opportunities for economic growth are being lost. This is because a nation runs a surplus when it is not investing its entire savings within its own borders.    The immediate problem facing India is the low rate of investment in its domestic economy. This is caused by a number of factors. Not only is the rate of savings now compared to other Asian countries, but also a high proportion of these savings are used to cover local and federal government deficits. The government's budget deficit itself tends to discourage foreign investment in the country. High import tariffs and government support for inefficient industries also act as barriers to growth.    Fortunately, India's current prime minister, Manmohan Singh, is not one to gloat over the success of the economy as shown by the export of invisibles. Just a few months ago, he gave an interview in which he complained, “We are a poor country and we need more capital, but we are ending up as a lender to the United States at very low rates of interest. “Singh's remarks indicate that he has grasped the problems facing the Indian economy clearly. The only question remains: Can he do anything about them?