<p>India’s current account deficit (CAD) increased significantly during the first quarter of the fiscal year 2023–24, rising to $9.2 billion. This amount is more than seven times more than the CAD total from the previous quarter.</p>
<p>According to information released by the Reserve Bank of India (RBI) on September 28, the CAD for the months of April through June represented 1.1 percent of the nation’s Gross Domestic Product (GDP).<img decoding=”async” class=”alignnone wp-image-209402″ src=”https://www.theindiaprint.com/wp-content/uploads/2023/09/theindiaprint.com-woman-speaks-in-multiple-accents-with-amazing-ease-amazes-internet-download-2023-0.jpg” alt=”theindiaprint.com woman speaks in multiple accents with amazing ease amazes internet download 2023 0″ width=”1329″ height=”744″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2023/09/theindiaprint.com-woman-speaks-in-multiple-accents-with-amazing-ease-amazes-internet-download-2023-0.jpg 300w, https://www.theindiaprint.com/wp-content/uploads/2023/09/theindiaprint.com-woman-speaks-in-multiple-accents-with-amazing-ease-amazes-internet-download-2023-0-150×84.jpg 150w” sizes=”(max-width: 1329px) 100vw, 1329px” title=”RBI: In the June quarter, India's current account deficit reached $9.2 billion 3″></p>
<p>The RBI ascribed this increase in the trade deficit, together with a fall in the net services surplus and a decrease in private transfer receipts, to the widening of the CAD on a quarter-over-quarter basis.</p>
<p>The CAD was $1.3 billion in the first quarter of 2023, or 0.2 percent of the GDP. The CAD, however, considerably increased from April to June 2022 to reach $17.9 billion, or 2.1 percent of the GDP.</p>
<p>India’s services trade surplus increased from $31.1 billion in April to June 2022 to $35.1 billion in April to June 2023. This amount was less than the $39.1 billion reported from January to March 2023, however.</p>
<p>Similarly, even if the merchandise trade deficit decreased from $63.1 billion to $56.6 billion, it was still larger than the $52.6 billion figure for the quarter of January-March 2023 before that.</p>
<p>The dip in exports of computer, travel, and business services, according to RBI, was the main cause of the sequential drop in net services revenues.</p>
<p>India’s overall trade deficit in April–June 2023 was $21.5 billion, lower than the $32.0 billion deficit in the same period in the previous year but higher than the $13.5 billion deficit in the first quarter of 2023.</p>
<p>According to Emkay Global Financial Services’ head economist, Madhavi Arora, “July-September 2023 will witness “significant widening of CAD” due to higher oil prices, higher core imports, and further sluggish services exports.”</p>
<p>All of this suggests that the CAD/GDP ratio for the period of July to September 2023 might be between 2.4 and 2.6 percent higher than for the period of April to June 2023.</p>
<p>“CAD widened to $9.2 billion (-1.1% of GDP) in Q1 FY2024 from $1.3 billion in Q4 FY 2023 (-0.2% of GDP), but trailed our forecast,” said Aditi Nayar, chief economist and head of research and outreach at ICRA. “This was driven by a healthier than anticipated merchandise trade balance, even as the services trade surplus and balance of secondary income were smaller than anticipated.”</p>
<p>Nayar said, “ICRA expects the CAD to widen sequentially to $19-21 billion (-2.3% of GDP) in Q2 FY2024 given the average merchandise trade deficit trending higher in July-Aug 2023 relative to Q1 FY2024 levels and the recent rise in crude oil prices.”</p>
<p>ICRA predicts that the CAD would increase overall to $73-75 billion (-2.1% of GDP) in FY2024 from $67.0 billion (-2.0% of GDP) in FY2023, accounting for an average crude oil price of $90 per barrel in H2 FY2024.</p>
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