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Current Account Deficit to moderate to 1.96% in Q4 FY22

Published on June 10, 2022
Current Context: According to a recent report of India Ratings and Research (Ind-Ra) it has been expected that the current account deficit to be maintained at 1.96% of GDP in the 4Quartee of FY22.
Current Account Deficit to moderate to 1.96% in Q4 FY22
  • According to an assessment by the rating agency it is estimated to amount to $17.3 billion in the fourth quarter of FY22 compared to Rs 8.2 billion earlier a year ago.
  • This improvement has happened due to an increase in merchandise exports in FY22 when they grew 42.4% compared with the 7.5% contraction.
  • The world trade body pegged import growth for India’s key exporting partners such as North America and Europe at 3.9% and 3.7%, respectively.
  • It is also expected that merchandise exports to come in at $112.5 billion, growing by 17.7% in the first quarter of FY23.
  • The main reason behind India’s merchandise imports is acceleration on the back of escalated commodity prices and rupee depreciation in FY23.
  • However, the rupee is expected to average at 77.1 against a US dollar in Q1, down 4.5% over Q1 FY22.

Question:

Q.1 As per the Ind-Ra report what will be the expected Current Account Deficit?
a. 1.21%
b. 1.96%
c. 2.1%
d. 3.2%
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