India’s Current Account Deficit Shrinks to 0.7% of GDP, Records Surplus in Q4: RBI

India’s current account deficit (CAD) narrowed significantly to 0.7% of GDP in the fourth quarter of the fiscal year 2023 (Q4 FY23), marking a significant improvement from the 3.0% recorded in the previous quarter. The Reserve Bank of India (RBI) also reported a current account surplus of 0.6% in Q4 FY23, a positive indicator of the country’s economic health.

Key Highlights:

CAD reduction: The shrinking deficit is largely attributed to robust export performance and a moderation in imports.
Surplus in Q4: The current account surplus in the fourth quarter signals a strong inflow of foreign exchange, boosting India’s foreign currency reserves.
Impact on economy: The improved current account balance strengthens the Indian rupee and provides greater stability to the economy.
Stronger exports: Exports continued to perform well, contributing to the reduction in the deficit.
Moderate imports: A slowdown in domestic demand and declining global commodity prices led to a decrease in imports.

Significance:

The narrowing of the CAD and the emergence of a surplus in Q4 FY23 are positive developments for the Indian economy. These indicate a favorable external environment and a strengthened economic position. The reduction in CAD is expected to improve the country’s debt burden and enhance investor confidence.

Outlook:

The RBI expects the current account balance to remain in surplus in the current financial year (FY24) due to a combination of factors, including robust export performance and stable imports. However, potential challenges such as global economic uncertainties and rising interest rates might impact the outlook.

Overall, the positive trends in India’s current account balance signal a healthy economic environment and contribute to a more stable and resilient economy.

Keywords: India, Current Account Deficit, CAD, GDP, RBI, Q4 FY23, Surplus, Exports, Imports, Economy, Foreign Exchange, Rupee, Economic Outlook