India's Current Account Deficit Narrows to $9.2 Billion in 2023-24 Q1

  • 29 Sep 2023

India's current account deficit (CAD) in the first quarter of 2023-24 has decreased to $9.2 billion, equivalent to 1.1% of GDP, as recently reported by the Reserve Bank of India (RBI).

Key Points

  • CAD Overview: The current account deficit (CAD) occurs when the value of imports of goods, services, and investment incomes exceeds the value of exports.
  • In Q1 2023-24, the CAD narrowed to $9.2 billion, although it remained higher than the $1.3 billion recorded in the preceding quarter.
  • Factors Contributing to CAD Change: The quarter-on-quarter widening of CAD was primarily attributed to an increased trade deficit, coupled with a decrease in net services surplus and private transfer receipts.
  • Trade Deficit Impact: The lower trade deficit of $56.6 billion, compared to $63 billion in the previous year, significantly contributed to the improvement in CAD.
  • This improvement was attributed to declining global commodity prices in the current fiscal year.
  • Future Trends and Projections: Economists anticipate potential changes in CAD trends due to factors such as fluctuating crude oil prices, foreign portfolio investments (FPI) inflows, external commercial borrowings (ECBs), and foreign direct investments (FDI).