Key Takeaways
- The current account deficit rose to $9.2 billion in Q1 FY24, driven by a larger trade deficit.
- Net services receipts fell, while the crude oil price surge added pressure on the balance of payments.
- ICRA projects the CAD to reach $73‑75 billion for FY24, reflecting ongoing external sector challenges.
New Delhi: India’s current account deficit (CAD) widened to $9.2 billion or 1.1% of GDP in the April‑June quarter (Q1 FY24).
The previous quarter (Q4 FY23) showed a deficit of $1.3 billion (0.2% of GDP). Data were released by the Reserve Bank of India (RBI) on Thursday.
The CAD, however, narrowed in Q1 as compared to the same period last year when it stood at $17.9 billion or 2.1% of GDP.
“The widening of CAD on a quarter-on-quarter (QoQ) basis was primarily on account of a higher trade deficit coupled with a lower surplus in net services and decline in private transfer receipts,” RBI said in a press release.
The central bank noted that net services receipts decreased sequentially, primarily due to a decline in exports of computer, travel and business services, though remained higher on a year-on-year (y-o-y) basis.
“With the average merchandise trade deficit trending higher in July-August 2023 relative to Q1 FY2024 levels, and the recent rise in crude oil prices, ICRA estimates the CAD to widen sequentially to $19-21 billion (-2.3% of GDP) in Q2 FY2024,” ICRA Chief Economist Aditi Nayar said.
Overall, ICRA has projected the CAD to widen to $73-75 billion in FY24 from $67 billion in FY2023, building in an average crude oil price of $90 a barrel in the second half of the current financial year.
