CAD likely to remain within 3 pc of GDP, says RBI article

India's current account deficit (CAD), a key indicator of balance of payment of a country, is likely to remain within 3 per cent of the GDP in 2022-23 as against 1.2 per cent during the last fiscal, according to an article published in the Reserve Bank's bulletin. The widening trade deficit, or the gap between the value of imports and exports, puts pressure on the balance of payments.

India's trade deficit during the first five months of 2022-23 widened to USD 124.5 billion from USD 54 billion in the previous corresponding period.

In the entire fiscal 2021-22, the trade deficit was USD 189.5 billion.


The article titled 'State of the Economy' said most importantly, future prices for crude oil contracts over the next few months have softened. International prices of vegetable oils and fertilisers are also looking more benign than before.

There are other bright spots too, it said, and added that in August, exports of petroleum products have rebounded y-o-y.

Overall, the export target of USD 750 billion for goods and services for 2022-23 is appearing within reach.

In addition, India is cementing its position as the top remittances' receiver in the world, with inflows touching USD 90 billion last year and set to create a new record, it said.

"Overall, the current account deficit is expected to be within 3.0 per cent of GDP. With portfolio flows returning and foreign direct investment remaining strong, this order of deficit is eminently financeable," said the article authored by a team lead by RBI Deputy Governor Michael Debabrata Patra.

The central bank, however, said the opinions expressed in the article are those of the authors and do not represent the views of the Reserve Bank of India (RBI).