Staff Reporter | 02 Oct, 2023
Current account deficit jumped 7-fold in the
April-June quarter. It stands at $9.2 billion against $1.3 billion in the
preceding quarter, according to RBI data released last week. The central bank
points out three factors - higher trade deficit, lower surplus in net services
and decline in private transfer receipts. Experts caution that the situation
may worsen further with rising crude oil prices in the
international market.
Detailed
data shows that merchandise trade deficit – which although decreased
from $63.1 billion a year-ago -- increased to $56.6 billion in the first quarter
from $52.6 billion in the preceding quarter. On net services, the central bank
points out decline in exports of computer, travel and business services while private
transfer receipts moderated to $27.1 billion from $28.6
billion.
The April-June quarter CAD amounts to 1.1
per cent of GDP and it may reach over 2 per cent in the July-September
quarter on account of increase in oil prices in global markets combined with
India’s higher core imports and further slowing of services exports. Russian
crude accounts for a third of India's fuel imports and according to an estimate,
rise in average price of oil to $100 per barrel may push the second half CAD to
2.1% of GDP.
Meanwhile,
decline in foreign exchange reserves has added to the economy's
woes. RBI data shows that forex reserve fell for a third consecutive week to a
four-month low of $590.7 billion as of September 22. Previously, the forex
kitty decreased
by $867 million to $593.04 billion for the week ended on September 15 and by
$4.992 billion to $ 593.904 billion for the week ending September 8. This,
along with the rupee ending at 83.04 on Friday, is not good
news for the economy.
I invite your opinions.
