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India’s Current Account Deficit Narrows as Trade Improves

The Reserve Bank of India said the country’s current account deficit stood at $1.3 billion or 0.2% of GDP in January to March, the fourth quarter of 2022/23 fiscal year

India's current account deficit narrowed in the Jan-March quarter as the country's trade gap shrank, the RBI said Tuesday.
The Reserve Bank of India seal is seen on the gave outside RBI head office in Mumbai (Reuters file photo).


India’s current account deficit fell significantly in the January-to-March quarter, according to the country’s central bank.

The Reserve Bank of India said on Tuesday that the improvement stemmed from a moderation in the trade gap and an increase in services exports.

The current account deficit (CAD) stood at $1.3 billion or 0.2% of GDP in the fourth quarter of fiscal year 2022/23, compared with a revised deficit of $16.8 billion or 2% of GDP in the preceding October-December quarter.

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The deficit had stood at $13.4 billion in the same quarter a year ago, the central bank’s statement said.

“The sequential decline in CAD in Q4:2022-23 was mainly on account of a moderation in the trade deficit to $52.6 billion in Q4:2022-23 from $71.3 billion in Q3:2022-23, coupled with robust services exports,” the RBI said in the release.

A Reuters survey of 22 economists showed the current account balance likely recorded a surplus of $3.3 billion, or 0.4% of gross domestic product (GDP) in the March quarter.

Forecasts ranged widely, from a deficit of $5.0 billion to a surplus of $7.8 billion.


Current account seen narrower in 2023/24

Barclay’s said India’s current account dynamics are expected to improve on average in the current year.

“We forecast the current account deficit to print lower in FY23-24: both export and import values are expected to soften owing to weak external demand and lower international commodity prices – leading to a narrower goods trade deficit compared to the previous fiscal year,” Barclay’s Jaydeep Raval said in a research note on Tuesday.

“We think a larger boost to the current account balance will come from a robust services trade surplus. We thus expect the current account deficit to print around $40bn (1.1% of GDP) in FY2023-24, and increase only modestly to 1.2% of GDP in FY2024-25.”


  • Reuters with additional editing by Jim Pollard


NOTE: This report was updated with comment from Barclays on June 27, 2023.





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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


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