As India’s trade deficit widened, the country’s current account deficit (CAD) rose to 1.4 per cent of gross domestic product (GDP) in the December quarter. CAD stood at 0.6% of GDP in the September quarter.
According to Livemint, a marginal decline in remittances by overseas Indians contributed to the rise in CAD. However, India’s CAD came down from 4.8 per cent of GDP ($ 88.2 billion) in 2012-13 to 1.1 per cent of GDP ($ 22.2 billion) in 2015-16.
Credit rating agency ICRA in its report noted that it expects higher oil and gold imports to enlarge India's current account deficit to ~USD 30 billion (1.2 percent of GDP) in FY2018 from ~USD 20 billion in FY2017 (0.9 percent of GDP), arresting the trend of moderation recorded for four consecutive years since FY2014. However, the pressure related to the financing of a larger current account deficit would abate with the resumption of NRI deposits in FY2018.
With inputs from ANI
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