What is a sustainable CAD for India?

India's current account deficit stood at $11.2 billion or 1.2% of the GDP in the third quarter ended December

- Gopika Gopakumar

The Economic Survey for 2024-25 has raised concerns about the sustainable level of current account deficit (CAD) for India.

"India runs a CAD, and its investment needs are much larger considering the size of its economy. Supplementing domestic savings with reasonably large foreign savings expands the scope for capital formation," said the Economic Survey tabled by finance minister Nirmala Sitharaman in parliament on Friday.

"If, for various reasons, capital flows are going to be problematic, it raises questions as to the level of sustainable CAD for India. It may not be 2.5% to 3% as before, but it is much lower," it added.

India's current account deficit stood at $11.2 billion or 1.2% of the GDP in the third quarter ended December compared with a deficit of $11.3 billion or 1.3% of the GDP a year earlier.