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Current a/c deficit eases to $13.4bn in Q4 from Q3


MUMBAI: The current account deficit (CAD) for the fourth quarter of FY22 came in at $13.4 billion, which works out to 1.5% of the GDP, lesser than expected by the market. On a sequential basis, the CAD declined from $22.2 billion, or 2.6% of GDP, in Q3FY22.
The CAD for the full year was $38.7 billion, or 1.2% of the GDP, as against a surplus of $24 billion, or 0.9% of the GDP, in FY21. “The current account deficit printed well below our forecast of $16 billion in Q4FY22, benefiting from higher-than-expected secondary income,” said ICRA chief economist Aditi Nayar. The secondary income shows current transfers between residents and non-residents, such as worker remittances and other capital transfers. Worker remittances between January and March this year was $12.9 billion – marginally lower than $13.7 billion in the preceding quarter. But overall secondary income was steady at $21 billion.
“On a YoY (year-on-year) basis, although gold imports halved and the services trade surplus rose, this improvement was dwarfed by the widening of the merchandise trade deficit led by imports of commodity inputs such as crude oil, coal and fertilisers, as well as electronic goods,” said Nayar. According to the RBI, the sequential decline in CAD in Q4 was mainly on account of a moderation in trade deficit and lower net outgo of primary income.
During FY22, the trade deficit widened to $189.5 billion from $102.2 billion in the previous year, which resulted in slippage in the number, which is considered a key representation of a country’s external strength, the central bank said.



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