New Delhi, 2 April (IANS). With strong service exports and remittances coming from Indians working abroad, it will help to keep India’s current account deficit (CAD) in a safe area during FY 2025-26, even if the country’s merchandise trade deficit has come under some pressure. This information was given in a latest Crisil report released on Wednesday.
The report estimated that the current account deficit in 2025-2026 will be marginally higher with GDP being at 1.3 percent, while in 2024-2025 it is estimated to be 1 percent of GDP.
The report stated that India’s CAD was $ 11.5 billion in the third quarter of FY 2024-25, ie 1.1 percent of the GDP (GDP), as compared to $ 10.4 billion i.e. 1.1 percent of GDP in the same quarter last year.
Serially, the deficit decreased by $ 16.7 billion in the second quarter of FY 2025, ie 1.8 percent of GDP.
The trade trade deficit was poor during the third quarter, but the balance and remedies of services from Indians working abroad continued to balance.
The report stated that the increase in trade trade deficit was mainly due to deteriorating oil trade balance, as exports declined and imports increased.
Net outflows were observed in foreign capital during the third quarter, while net inflows occurred in the same period last year.
The report said that the rupee declined by 1.6 percent in the third quarter and came from 83.2 to 84.5 per dollar in the same quarter of the last financial year.
Financial accounts saw outflows in all sub-components, including a maximum amount of $ 11.4 billion from the pure foreign portfolio investor (FPI) segment.
Other investments saw outflow for the first time since the second quarter of FY 2023.
Despite the current account deficit, the net withdrawal from the financial account meant the impact on India’s foreign exchange reserves, which decreased by $ 37.7 billion during the third quarter.
However, it also reflects the intervention of the Reserve Bank of India in the foreign exchange market through a US dollar sales to prevent rapid fluctuations in rupee during the quarter.
Since that time the situation has become somewhat stable. The report stated that as a result, India’s foreign exchange reserves increased from $ 644.4 billion to $ 658.8 billion at the end of the third quarter till March 21.
-IANS
SKT/ABM
