India’s current account deficit (CAD) in April-June stands at $23.9 billion, or 2.8 percent of gross domestic product (GDP), much higher than the $13.4 billion, or 1.5 percent of GDP, in January-March 2022. However it is lower than an analyst's prediction of 3% of GDP, Business Standard reported quoting RBI data.
In April-June 2021, India recorded a current account surplus of $6.6 billion, or 0.9 percent of GDP. The CAD for FY22 was 1.2 percent of GDP, or $38.7 billion.
India's trade deficit in August widened to $27.98 billion from $11.71 billion in the same month of last year. Sequentially, it has moderated from a record high of $30 billion in July. In August, exports fell to $33 billion, from $40.1 billion and $36.3 billion registered in June and July, respectively.
Global crude oil and commodity prices have risen since the start of the Russian-Ukraine war, and the shortage of coal domestically has pushed more coal imports.
From April to August, India’s trade deficit rose to $125.22 billion, versus $53.78 billion at the same time last year.
As the trade deficit keeps expanding month after month, pressure is building on the rupee since many more dollars are going out than coming in. This causes the rupee to weaken or depreciate while strengthening the dollar.
On Wednesday, the Indian rupee reached another record low of 82 against the US dollar, surpassing its previous low of 81.77 marked on Tuesday.
As exports dip, Standard Chartered raised its estimate of India's current account deficit forecast for the fiscal year ending March 2023 to 3.8% of India's GDP from its earlier estimate of 3.0%, which is a higher projection than peers Morgan Stanley, Goldman Sachs, and Nomura, Reuters reported.
Meanwhile, the RBI said India's external debt during the first quarter of 2022-23 declined by $2.5 billion to $617.1 billion. The external debt to GDP ratio declined to 19.4% at the June end of 2022 from 19.9% in March-end 2022.
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