India's Current Account Deficit

Published on March 13, 2020
Current context: According to data released by Reserve Bank of India (RBI) on 12th March 2020, India's current account deficit (CAD) stands just at $1.4 billion in the October- December quarter of the 2019-20 fiscal year.
India's Current Account Deficit
  • The data showed that the CAD eased to 0.2% of GDP in the December quarter (3rd quarter) from 0.9% of GDP in the September quarter.
  • The CAD accounted for 2.7% of the GDP in the year-ago period.
  • As per the report, the major cause of the sharp contraction was:
    1. Primarily due to a lower trade deficit at $34.6 billion.
    2. A rise in net services receipts at $21.9 billion.
  • As per the RBI data, the net foreign direct investment was at $10 billion in the third quarter while external commercial borrowing-related inflows stood at $3.2 billion.
  • The current account deficit (CAD) is a macroeconomic indicator that represents the gap between the overall foreign exchange expended and received in the economy.
  • As on 6th March 2020, India’s foreign exchanges reserves stood at $487.24 billion.

Question: 

Q.1 India's current account deficit (CAD) stood at _________ of GDP in the October- December quarter of the 2019-20 fiscal year?
a. 0.1%
b. 0.2%
c. 0.8%
d. 0.9%

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