CAD narrows to 0.2% of GDP in Q4 FY23 on lower trade deficit, higher services exports

India’s current account deficit narrowed to $1.3 billion or 0.2% of GDP in the January-March quarter of FY23, mainly due to moderation in the trade deficit and a robust increase in services exports, RBI data showed on June 27. However, for the 2022-23 fiscal, the current account balance recorded a deficit of 2% of GDP compared to 1.2%t in 2021-22.

India's current account deficit narrowed to $1.3 billion or 0.2% of GDP in the January-March quarter of FY23, mainly due to moderation in the trade deficit and a robust increase in services exports, RBI data showed on June 27.

However, for the 2022-23 fiscal, the current account balance recorded a deficit of 2% of GDP compared to 1.2%t in 2021-22.

“India’s current account deficit (CAD) decreased to $1.3 billion (0.2% of GDP) in Q4:2022-23 from $16.8 billion (2.0% of GDP) in Q3:2022-231, and $13.4 billion (1.6% of GDP) a year ago [Q4:2021-22],” as per the RBI’s ‘Developments in India’s Balance of Payments during the Fourth Quarter (January-March) of 2022-23’.

The sequential decline in CAD in the fourth quarter of 2022-23 was mainly on account of a moderation in the trade deficit to $52.6 billion from $71.3 billion in the preceding quarter, coupled with robust services exports, it said.

Net services receipts increased, on a sequentially and year-on-year (y-o-y) basis, on the back of a rise in net earnings from computer services.

The central bank had been maintaining that the CAD, a key indicator of the country's balance of payments, would remain manageable.