Current Account Deficit at $ 23.90 billion in June quarter

30 Sep 2022 , 12:55 PM

According to statistics released on Thursday by the Reserve Bank of India (RBI), India’s current account deficit grew in the April-June quarter as a result of rising global commodity prices that increased the trade imbalance as well as significant capital outflows.

The current account deficit (CAD), measured in absolute terms, reached a record of $23.90 billion in the first quarter of the fiscal year 2022—2023–the biggest since the December quarter of 2012. But the CAD stood at 2.8% as a share of GDP, the highest level in over four years.

The CAD was $13.4 billion, or 1.5% of GDP, in the January-March quarter that had just ended, compared to a surplus of $6.6 billion, or 0.9% of GDP, in the same period a year earlier, according to the announcement.

An average estimate of $30.5 billion, or 3.6% of GDP, was made by 18 economists in a Reuters poll conducted from September 9 to 15. According to Bank of Baroda Chief Economist Madan Sabnavis, “the Invisibles account has provided significant assistance even while the trade deficit has increased, with both software and remittances enjoying greater net inflows.”

According to the RBI, private transfer revenues, which mostly reflect remittances from Indians working abroad, increased by 22.6% to $25.6 billion from a year earlier. The nation’s balance of payments saw a $4.6 billion surplus, up from a $16 billion deficit the quarter before and a $31.9 billion surplus the same quarter last year.

According to updated statistics given by the government earlier this month, India’s merchandise trade imbalance increased in August to $27.98 billion from $11.71 billion a year earlier. According to the press release, an increase in net outbound investment income payments from $7.5 billion to $9.3 billion over the previous year was a major factor in the rise in the CAD.

According to Rupa Rege Nitsure, chief economist at L&T Financial Holdings, “CAD will unquestionably expand more notwithstanding the reduction in crude oil prices.” “If and only if India’s economic prospects improve, it will be able to draw additional capital inflows. In FY23, India’s CAD may be between 3.5 and 3.7% of GDP, based on underlying trends “She said.

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