A recent Reuters poll shows that India's current account deficit likely widened to its highest in nearly a decade in the April-June quarter, driven by soaring global commodity prices and the biggest capital outflows since the global financial crisis of 2008.
With the Indian rupee near a record low of around 80 to the U.S. dollar and a worsening trade gap, worries over the size of the current account shortfall for Asia's third-largest economy, gnawing at investor confidence for months, are set to intensify, the report said
The median forecast in a September 9–15 Reuters poll of 18 economists showed India's current account deficit last quarter was $30.5 billion, or 3.6% of gross domestic product, the widest in nine years.
Forecasts ranged between $28.5 and $34.0 billion, or 2.4%–5.0% of GDP. For the Jan-March quarter, the deficit was less than half that size at $13.4 billion, about 1.5% of GDP.
While the rupee has depreciated around 7% against the greenback since January 2022, it lost around 20% during the taper tantrum crisis of 2013 when the U.S. Federal Reserve suddenly cut its government bond purchases.
Even as New Delhi responded to a widening trade gap by raising import duty on gold at the end of June, the full extent of that measure will be shown only this quarter.
Meanwhile, the trade deficit in August widened to a high of USD 29.98 billion, up from $11.71 billion during the corresponding period of last year. India's trade deficit widened to a record $30 billion in July.
On September 7, Standard Chartered raised its CAD forecast for the fiscal year ending March 2023 to 3.8% of India's GDP from its earlier estimate of 3.0%, Reuters reported.
Prior to this, Bank of America Securities predicted that India's current account deficit would likely reach 3% of GDP this fiscal year, citing a continued trade deficit.
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