India reports CAD of 1.2% of GDP in FY22 on widening trade deficit: RBI

Current account deficit narrows to $13.4 bn or 1.5% of GDP in March qtr against $22.2 bn or 2.6% of GDP in December qtr, say RBI

India witnessed a current account deficit of 1.2 per cent of GDP in 2021-22 against a surplus of 0.9 per cent in FY2020-21 due to a wider trade deficit, the Reserve Bank said on Wednesday.

For the January-March 2022 quarter, the CAD narrowed on a sequential basis to USD 13.4 billion or 1.5 per cent of GDP against USD 22.2 billion or 2.6 per cent of GDP in the December 2021 quarter.

Current account deficit occurs when the value of goods and services imported and other payments exceeds the value of export of goods and services and other receipts by a country in a particular period.

The trade deficit widened to USD 189.5 billion in FY22 from USD 102.2 billion a year ago, which resulted in slippage in the number which is considered a key representation of a country's external strength, the RBI said.

The Balance of Payments data suggested that goods imports stood at USD 618.6 billion in FY22 as against USD 398.5 billion in the year-ago period, leading to the widening of the trade deficit.