Current account deficit widens to 2.8% of GDP

Trade deficit jumps; services exports, remittances show momentum in Q1

- BHASKAR DUTTA

India's current account deficit (CAD) in April-June was at $23.9 billion, or 2.8 per cent of gross domestic much product (GDP), than higher the $13.4 billion, or 1.5 per cent of GDP, in January-March 2022, the Reserve Bank of India (RBI) said on Thursday.

India had recorded a current account surplus of $6.6 billion, or 0.9 per cent of GDP, in April-June 2021. The CAD for FY22 was 1.2 per cent of GDP, or $38.7 billion. For the first quarter of the current year, it is lower than analysts' prediction of around 3 per cent of GDP.

"Underlying the current account deficit in Q1:2022-23 was the widening of the merchandise trade deficit to US$ 68.6 billion from US$ 54.5 billion in Q4:202122 and an increase in net outgo of investment income payments," the RBI said on Thursday.

India has faced upward pressure on its import bill in 2022 because Russia's invasion of Ukraine in late February led to a sharp rise in prices of commodities across the globe.

During April-August, India's trade deficit rose to $125.22 billion versus $53.78 billion the same time last year. So far in 2022, the rupee has depreciated 9.2 per cent against the dollar.