India’s Current Account Deficit Likely to Rise 1% of GDP in Q2FY25: Ind-Ra Report

Current Context: On 4th September 2024, According to a recent report by India Ratings and Research (Ind-Ra), India’s current account deficit (CAD) is expected to rise to 1% of GDP in the second quarter of FY25.

• This increase is attributed to a combination of factors, including a 1% increase in merchandise exports and a widening goods trade deficit.
• In the first quarter of FY25, India’s merchandise exports grew by 6% year-on-year, while imports grew by 7.6%.
• The report also highlights that the current account balance (CAB) registered a deficit of around $8 billion (0.8% of GDP) in Q1 FY25, a reversal from the surplus of $5.7 billion (0.6% of GDP) recorded in the previous quarter.

Question:

1 What is the expected current account deficit (CAD) as a percentage of GDP for India in the second quarter of FY25, according to the recent report by India Ratings and Research (Ind-Ra)?

• A) 0.5%
• B) 1%
• C) 1.5%
• D) 2%

Answer: B) According to the report by India Ratings and Research, India’s current account deficit (CAD) is expected to rise to 1% of GDP in the second quarter of FY25.