India's CAD moderates to $23.2 bn at 0.7% of GDP for 2023-24
Outflows reducing considerably are a positive indicator of the thumbs-up given by rating agencies which are reassuring for FDI and FPI inflows with the current investments gaining some stickiness
India’s CAD moderated to $ 23.2 billion at 0.7 per cent of GDP for 2023-24 as against $ 67 billion at two per cent for 2022-23. Thus, January-March CAD surplus is currently at 0.6 per cent amounting to $ 5.7 billion andnet accretion to forex reserves at $ 30.8 billion. This is on the back of the lower merchandise trade deficit. Portfolio investment at net inflow of $ 44.1 billion versus net outflow of $ 5.2 billion a year ago. FDI inflow is at $ $ 9.8 billion as against $ 28 billion a year ago.
Talking to Bizz Buzz, MV Hariharan, former treasury head at SBI, says, “The ongoing India story is truly on track with these numbers. Forex reserves accretion is another example of this momentum.”
Outflows reducing considerably are a positive indicator of the thumbs-up given by rating agencies which are reassuring for FDI and FPI inflows with the current investments gaining some stickiness, he said
India’s current account deficit has come down to 0.7 per cent of GDP, or $23.2 billion in FY24 from 2 per cent of GDP or $67 billion a year back.
FPIs saw net inflow of $44.1 billion in FY24 after recording an outflow of $5.2 billion in FY23. Though new FDI inflow is down to $9.8 billion in FY24 as compared to $28 billion in FY23. Our current account also showed surplus in Q4FY24 of 0.6 per cent of GDP, a turnaround from deficits in earlier quarters.
Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors, says, “India's CAD recorded a surplus of $ 5.7 billion, which is 0.6 per cent of CAD in last quarter 2023-24, which was 1.0 per cent in same period of last year.”
For the full year, India's CAD recorded at 0.7 per cent of GDP for 2023-24 amounting to $ 23.2 billion. This was on the back of lower merchandise trade deficit. The trade deficit was at $ 265 billion last year, which fell to $ 242 billion in current year, while services exports increased from $ 143 billion to $ 163 billion, he said. There was an accretion of Reserves was $ 67 billion due to increase in NRI remittances and FPI.