Falling crude shrinks CAD in March quarter to $1.3 billion

The sequential decline in CAD from Q3 was mainly on account of moderation in trade deficit

- Rhik Kundu

NEW DELHI : India’s current account deficit narrowed to $1.3 billion or 0.2% of the Gross Domestic Product in the last quarter of FY23, down from $13.4 billion or 1.6% of the GDP a year ago, central bank data showed, an outcome of cooling oil prices and an uptick in services exports and remittances.

Trade deficit, the largest component of current account deficit (CAD), occurs when the value of the goods and services a country imports exceeds that of its exports. To be sure, India is largely a net importer on account of its heavy dependence on energy imports.

Sequentially, CAD was down from 2% of the GDP or $16.8 billion in the third quarter. This was mainly on account of a moderation in the trade deficit to $52.6 billion during the quarter from $71.3 billion in the year-ago period, coupled with robust services exports, the Reserve Bank of India said. “Private transfer receipts, mainly representing remittances by Indians employed overseas, increased to $28.6 billion, up by 20.8% from their level a year ago," it added.