India’s Current Account Deficit Falls to $2.4 Billion in Q1, Says RBI
The Reserve Bank of India (RBI) has reported that India’s current account deficit (CAD) narrowed to $2.4 billion in the first quarter (Q1) of FY25, a sharp decline compared to $9.2 billion recorded in the same quarter last year.
This improvement reflects robust services exports, steady remittances, and lower merchandise trade deficit, despite global uncertainties.
Key Highlights from RBI Data:
CAD Value: $2.4 billion (0.6% of GDP) in Q1 FY25.
Last Year Comparison: $9.2 billion (1.1% of GDP) in Q1 FY24.
Services Sector: Continued to post a healthy surplus, led by IT, business, and financial services.
Remittances: Strong inflows from overseas Indians cushioned the external account.
Trade Deficit: Moderated compared to previous years, helping balance the gap.
What Does It Mean for India’s Economy?
A lower CAD indicates better stability of India’s external position. It supports the Indian rupee, eases inflationary pressure, and provides confidence to foreign investors. With India’s economy expected to grow above 6.5% in FY25, a narrowing deficit is a positive sign for macroeconomic fundamentals.
Expert Views
Economists suggest that if global crude oil prices remain stable and services exports continue to grow, India’s CAD may remain under control for the rest of the fiscal year. However, global uncertainties like US monetary policy shifts and geopolitical risks could still pose challenges.
Frequently Asked Questions (FAQs)
Q1: What is India’s current account deficit in Q1 FY25?
India’s current account deficit stood at $2.4 billion (0.6% of GDP) in Q1 FY25, according to RBI data.
Q2: How does this compare to last year?
In Q1 FY24, the CAD was $9.2 billion (1.1% of GDP), much higher than this year’s levels.
Q3: What are the main reasons behind the lower CAD?
The fall is due to higher services exports, strong remittances, and a reduced merchandise trade deficit.
Q4: Why is a lower current account deficit important?
It signals economic stability, supports the rupee, lowers inflation risks, and improves investor confidence.
Q5: Will India’s CAD remain low in the coming quarters?
Experts believe CAD will remain under control if global oil prices stay stable and India maintains strong export performance.
Published on : 2nd September
Published by : Selvi
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