India’s current account deficit is eminently manageable and within viability parameters, Reserve Bank of India Governor Shaktikanta Das said.
Speaking at the FIMMDA-PDAI Annual Conference in Dubai, Das said that the net balance of services and remittances continues to run a large surplus, partly offsetting the trade deficit. While the slowdown in global demand weighs on merchandise exports, exports of services and remittances remain robust, he said.
India’s current account balance posted a deficit of $36.4 billion, or 4.4% of GDP, in the September quarter, up from $18.2 billion, or 2.2 % of GDP, in the first quarter. In November 2022, the government’s chief economic adviser said that the CAD for the current fiscal year was expected to be around 3-3.2% of GDP, which is much higher than the previous year’s 1.2%.
According to Das, the global economy is projected to contract significantly in 2023 as a result of multiple shocks. The Indian economy, however, remains resilient, drawing strength from its macroeconomic fundamentals, he added. Although inflation has eased during November and December 2022, core inflation remains stagnant and elevated.
Das highlighted some areas for financial market development, including the need to ensure liquidity for retail investors in the government stock market. He also noted that secondary market liquidity in g-secs is currently concentrated in a few securities and terms.
“A forward money market remains absent, despite a series of facilitating policy measures. The retail segment’s access to markets, especially derivatives markets, needs to be further improved,” she said. And transparent pricing.”