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India reports 1.2% CAD in FY22 as trade deficit widens

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Guwahati: The Reserve Bank of India forecast a current account deficit of 1.2% of GDP in 2021-22, compared to a surplus of 0.9% in FY2020-21, due to a larger trade imbalance.

The CAD fell sequentially to USD 13.4 billion or 1.5 percent of GDP in the January-March 2022 quarter, from USD 22.2 billion or 2.6 percent of GDP in the December 2021 quarter.

A current account deficit arises when the value of goods and services imported and other payments made by a country in a given time exceeds the value of goods and services exported and other revenues. The trade deficit increased to USD 189.5 billion in FY22 from USD 102.2 billion the previous year, resulting in a slippage in the statistic that is regarded as a vital indication of a country’s external strength, according to the RBI.

According to the Balance of Payments statistics, goods imports totaled USD 618.6 billion in FY22, up from USD 398.5 billion the previous year, expanding the trade imbalance.

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