IANS | 27 Mar, 2024
The current account deficit is foreseen to moderate below 1 per cent
of GDP led by growing merchandise and service exports coupled with
decline in import dependency, says Amnish Aggarwal, Director – Research,
Prabhudas Lilladher.
India’s current account deficit narrowed to
$10.5 billion (1.2 per cent of GDP) in Q3 FY24 as compared with $16.8
billion (2.0 per cent of GDP) in Q3 FY23 assisted by pick up in global
export demand.
The import bill has been controlled by easing
global commodity prices including oil amidst stable Rupee. Furthermore,
net services receipts and remittances continue to render support to the
current account balance.
The capital account was helped by buoyant
FDI and FPI inflows. Furthermore, FDI inflows are foreseen to gather
pace on the back of recovering growth prospects in investing economies
combined with strong economic fundamentals domestically, the analyst
said. Looking ahead, India’s balance of payment situation is likely to
remain stable as resilient domestic tailwinds may outweigh the global
headwinds.
Emkay Global Financial Services said the mild
sequential moderation in current account deficit (CAD) to $10.5 billion
(1.2 per cent of GDP) in Q3FY24 reflected offsetting of higher trade
deficit with better services exports and private transfers. Q3 CAD
funding has been smooth with massive FPI flows and consistently
improving banking capital.
Despite slower FDI flows, the rise in
capital account surplus ($17.4 billion) has meant net accretion of $6
billion. For FY24E, we maintain CAD/GDP at 0.8 per cent, led by
incrementally improving goods trade deficit and solid services trade
surplus, the brokerage said.
