Current Account Deficit in June quarter may be at 5.3% of GDP

2 Sep 2022 , 07:28 AM

India’s current account deficit (CAD) may approach a nine-year high in the June quarter of FY23 with the ratio of the net export topping 5.3 % of gross domestic product (GDP).

The Reserve Bank of India’s (RBI) CAD data also takes into account private transfer receipts. Net exports data, which is a component of GDP estimates and is typically negative for India, measures the difference between exports and imports of commodities and services. Therefore, CAD represents net exports and remittances from Indians working abroad.

The national account numbers for the June quarter, which were announced on Wednesday, indicated that net exports–often used as a proxy for the Canadian dollar–were at their highest level since the June quarter of 2013. CAD was 4.9% of GDP in the June quarter of 2013, while net exports were 5.9% of GDP.

The CAD for India was 1.5% of GDP in the March quarter of FY22 as opposed to 2.6% of GDP in the December quarter. India’s trade imbalance increased to a record $30 billion in July as exports expanded considerably more slowly than imports as a result of weaker global demand brought on by recessionary worries in the majority of industrialized nations.

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