India's current account deficit widens to $9.7 billion in the first quarter of fiscal year 2024, mainly due to a rise in merchandise trade deficit. This is a key indicator of the country's external sector and shows an increase from the $8.9 billion deficit in the same quarter last year. At the same time, net foreign direct investment inflows have increased to $6.3 billion and net external commercial borrowings have decreased to $1.8 billion in the current quarter. Non-resident deposits have also increased to $4 billion.
India's Current Account Deficit Widens to $9.7 Billion, Sparking Concerns
India's current account deficit, a key indicator of the country's external sector, has widened to $9.7 billion in the first quarter of fiscal year 2024, according to data from the Reserve Bank of India (RBI). This marks an increase from the $8.9 billion deficit recorded in the same quarter of the previous fiscal year.
The widening deficit is primarily attributable to a surge in merchandise trade deficit, which reached $113.1 billion during the quarter. This was driven by a sharp rise in imports and a modest growth in exports. The trade deficit was further exacerbated by a decline in net services exports.
Despite the widening current account deficit, there are positive signs in other areas of the external sector. Net foreign direct investment (FDI) inflows increased to $6.3 billion, while net external commercial borrowings (ECBs) declined to $1.8 billion. Non-resident deposits also rose to $4 billion.
Background
A current account deficit occurs when a country imports more goods and services than it exports. This deficit can be financed through inflows of foreign capital, such as FDI, ECBs, and remittances.
India's current account deficit has been a concern for policymakers in recent years, as it can lead to currency depreciation and put pressure on the country's foreign exchange reserves. The widening deficit in the first quarter of FY24 raises concerns about the sustainability of India's external sector in the face of rising global uncertainty and geopolitical tensions.
Top 5 FAQs
1. What is the significance of the current account deficit?
The current account deficit is a measure of the country's net trade in goods and services, and indicates whether the country is a net borrower or lender in the international financial markets.
2. Why has India's current account deficit widened?
The widening deficit is mainly due to a surge in merchandise trade deficit, caused by a rise in imports and a modest growth in exports.
3. What are the implications of a widening current account deficit?
A widening current account deficit can lead to currency depreciation, put pressure on foreign exchange reserves, and increase the country's external debt burden.
4. What measures can be taken to address the widening deficit?
Policymakers can take measures to promote exports, reduce imports, and attract foreign capital to finance the deficit.
5. What is the outlook for India's current account deficit?
The outlook for India's current account deficit is uncertain, but it is likely to remain elevated in the near term due to factors such as rising global commodity prices and geopolitical uncertainties.
The Maharashtra State Road Transport Corporation (MSRTC) launched a campaign on June 16, providing "Bus Pass Direct to School" for students. Through this initiative, 5,21,354 students have been able to benefit from subsidized transportation within just 15 days. In addition, girls up to Class 12 are receiving free bus passes under the "Punyashlok Ahilyabai Holkar Yojana." This new method of distribution has saved valuable time for students and parents who previously had to visit long queues at bus pass centres. However, Minister Pratap Sarnaik has also issued a strict directive to ensure regular operation of school buses in rural and tribal areas, emphasizing the importance of uninterrupted transportation for students' access to education.
Arsenal has a major deadline this summer to finalize deals in the transfer market, with reports suggesting agreements for Noni Madueke and Viktor Gyokeres. Head coach Mikel Arteta is setting a strict deadline for negotiations and the team's pre-season schedule has been released, including matches against AC Milan, Newcastle, and Spurs. The Gunners will also be competing in the Club World Cup, which can be streamed on DAZN. Stay updated on all the latest news and rumors surrounding the Emirates squad as they prepare for a crucial season.
Nithin Kamath, the co-founder and CEO of Zerodha, commends India's market watchdog SEBI for taking decisive action against US-based trading major Jane Street for manipulating the Bank Nifty index. Kamath praises SEBI for maintaining a strong and transparent regulatory environment, while cautioning about potential implications on the market due to a significant presence of proprietary trading firms like Jane Street. The firm has been accused of making extraordinary profits through complex strategies and ignoring warning alerts from Indian exchanges.
Kashmiri apple farmers are facing a difficult situation as record heat and dry spells threaten their annual harvest. The region, known for its rich apple production, is experiencing a worrying trend as the changing climate jeopardizes the livelihoods of these farmers. With extreme weather conditions becoming more frequent, farmers are left to worry about the future of their crops and the impact on their business. Join our WhatsApp channel to stay updated on the latest news and videos from Kashmir's apple farms.
Railway Recruitment Board (RRB) has finally released the highly anticipated RRB Group D result scorecard on December 27, 2022. Candidates can now check their results by visiting the official website of RRB at rrbcdg.gov.in. Keep yourself updated with the latest developments by clicking on the provided link.
Under the 'Pratibhashali Vidyarthi Protsahan Yojana', the Madhya Pradesh government has distributed a total of Rs 235.58 crore to 94,234 meritorious students who scored 75 per cent or more marks in their Class 12 board exams. This initiative aims to support the students' education and equip them with necessary tools like laptops to help them excel in their academic pursuits. Since its launch in 2009-10, the scheme has benefitted over 4.3 lakh students with a total disbursement of over Rs 1,080 crore.
The Securities and Exchange Board of India (SEBI) has taken action against US-based Jane Street Group for allegedly manipulating the Indian stock market. SEBI claims that the group carried out large-scale, aggressive trades on expiry days, particularly targeting Bank Nifty and Nifty 50 index constituents. This strategy involved buying stocks in the morning and selling them in the afternoon, resulting in a net options profit of Rs 673 crore on just January 17, 2024.
SEBI has ordered the impounding of Rs 4,840 crore in unlawful gains and the freezing of all debit transactions linked to Jane Street entities, including JSI Investments Pvt Ltd, Jane Street Singapore Pte Ltd, and Jane Street Asia Trading Ltd. This comes after a 105-page interim order by SEBI accused Jane Street and its affiliates of using high-frequency algorithmic trading strategies to artificially influence index levels and make profits from derivatives. Although not directly named, Nuvama Wealth Management's association with Jane Street has raised concerns among investors. As a result, Nuvama's stock plunged by Rs 838.00 in a single session, with the broader market also feeling the effects as the Nifty Capital Markets index fell by 2%.
IT giant Infosys has started an internal campaign to encourage employees to prioritize their health and disconnect after work hours. In a sharp contrast to co-founder Narayana Murthy's previous statement advocating for a 70-hour workweek, the move signals a shift in the company's stance on work-life balance. HR is now tracking work hours and sending health-focused reminder emails to prevent burnout and long-term health issues in the Indian IT sector. The campaign's success and impact on employee well-being will be closely monitored by the 323,000+ employees worldwide.
As Australian beef exports continue to reach new heights, official data shows a significant increase in volume for the first half of the year and a record-breaking 1.44 million tonnes shipped in the 2024-2025 financial year. This growth is attributed to a combination of factors, including declining US beef production, trade access issues, tariffs, and strong international demand. Despite the impact of drought on production in some parts of the country, Australia is well-positioned to take advantage of the current market dynamics.