CAD widens due to rise in merchandise imports

India Infoline News Service | Mumbai | August 09, 2017 09:27 IST

India’s current account deficit (CAD) stands at USD 3.4 billion (0.6% of GDP) in Q4 of 2016-17 which was higher than USD 0.3 billion (0.1% of GDP) in Q4 of 2015-16 but narrowed from USD 8.0 billion (1.4% of GDP) in the preceding quarter.

India’s current account deficit (CAD) stands at USD 3.4 billion (0.6% of GDP) in Q4 of 2016-17 which was higher than USD 0.3 billion (0.1% of GDP) in Q4 of 2015-16 but narrowed from USD 8.0 billion (1.4% of GDP) in the preceding quarter.
 
For 2016-17 full year, the current account deficit (CAD) narrowed down to 0.7% of GDP from 1.1% of GDP in 2015-16. 
 
The widening of the CAD in the fourth quarter of 2016-17 on a year-on-year basis was on account of a higher trade deficit (USD 29.7 billion) due to a larger increase in merchandise imports relative to exports. A substantial increase in imports of petroleum, oil and lubricants, and gold and silver led to the rise in imports in last quarter of 2016-17.
 
Despite the widening in Q4 of 2016-17, the CAD is low and within manageable limits.  The Government and the RBI closely monitor the emerging external economic situation including CAD and calibrate policies on an ongoing basis, stated Arjun Ram Meghwal, Minister of State for Finance in Rajya Sabha on Tuesday.

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