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Expect the Current Account Deficit to Remain at a Sustainable Level

Published on June 09, 2022
Current Context: As per RBI Governor the current account deficit to remain at a sustainable level and the normal flows will enable to meet the financing of the current account deficit.
Expect the Current Account Deficit to Remain at a Sustainable Level
  • The country's current account deficit increased to $23 billion, or 2.7% of GDP, in the third quarter of FY 2021-22 compared to $9.9 billion or 1.3% of GDP in the second quarter.
  • The reason for the widening of CAD in Q3 FY22 was mainly on account of a higher trade deficit.
  • Apart from that higher exports are the good signs for the economy. Higher imports also play a very important role in capital expenditure and investment.
  • Besides Rural and urban demand are showing signs of further improvement and disbursal of bank credit is also picking up rapidly.
  • It has been observed that the Indian rupee is one of the better-performing currencies among its emerging market peers.

Question:

Q.1 The Current account deficit in the third quarter of FT 2021-22 has been maintained at what percentage of GDP?
a. 3.5%
b. 2.7%
c. 5.1%
d. 1.3%
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