Moderating current account deficit to fall below 1% of GDP as exports continue to grow
New Delhi, March 27 (IANS) The current account deficit is projected to decrease below 1 per cent of GDP with an increase in merchandise and service exports and a decrease in import dependency, according to Amnish Aggarwal, Director – Research, Prabhudas Lilladher.
India’s current account deficit for Q3 FY24 reduced to $10.5 billion (1.2 per cent of GDP) from $16.8 billion (2.0 per cent of GDP) in Q3 FY23, supported by a rise in global export demand.
The import bill was managed by lower global commodity prices, including oil, and a steady Rupee. Additionally, net services receipts and remittances continued to bolster the current account balance.
The capital account benefited from strong FDI and FPI inflows, with FDI inflows expected to increase due to improving growth prospects in investing economies and solid economic fundamentals in India, the analyst noted. India’s balance of payment situation is likely to remain stable, with domestic factors outweighing global challenges.
Emkay Global Financial Services reported a slight decrease in current account deficit to $10.5 billion (1.2 per cent of GDP) in Q3FY24, offset by improved services exports and private transfers. Funding for Q3 CAD was smooth with significant FPI inflows and a strengthening banking sector.
Despite a slowdown in FDI inflows, the capital account surplus increased to $17.4 billion, resulting in a net accretion of $6 billion. For FY24, the CAD/GDP is predicted to be 0.8 per cent, driven by a better goods trade deficit and strong services trade surplus, as per the brokerage.
–IANS
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