Last financial year, India’s current account deficit (CAD) printed at a non-worrisome 0.6 per cent of gross domestic product (GDP), driven by healthy net invisible receipts. It was a whit lower than 0.7 per cent in 2023-24, despite the goods trade deficit rising to 7.3 per cent of GDP from 6.7 per cent.
This happened because both the services trade and secondary income accounts saw a higher surplus, which more than offset the deterioration in the goods trade deficit. Such low reliance on external financing of CAD is a buffer against volatility in capital flows and the attendant currency swings
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper