India's CAD widens to 1.1 per cent of GDP

India's current account deficit (CAD) expanded to $9.2 billion in the first quarter of fiscal year 2023-24 (Q1 FY24), representing 1.1 percent of the country's gross domestic product (GDP).

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This was a significant increase from $1.3 billion in the previous quarter (Q4 FY23), which accounted for only 0.2 percent of GDP. In the same quarter a year ago, the CAD was $17.9 billion, or 2.1 percent of GDP.

The widening of the CAD in Q1 FY24 was attributed to a higher trade deficit, a reduced surplus in net services, and a decline in private transfer receipts, according to a statement from the Reserve Bank of India (RBI).

The trade deficit for Q1 FY24 increased to $56.6 billion, up from $52.6 billion in Q4 FY23. However, it should be noted that the CAD's increase was somewhat mitigated by a better-than-expected performance in the merchandise trade balance.