India's BoP Is Likely To Slip Into Deficit Of $40-$50 Billion: Report The International Monetary Fund has estimated India's FY23 current account deficit (CAD) at $121 billion or 3.5 per cent of GDP
By Teena Jose
Opinions expressed by BIZ Experiences contributors are their own.
You're reading BIZ Experiences India, an international franchise of BIZ Experiences Media.
India's Balance of Payments (BoP) has likely to slip into a deficit of $40 to $50 billion in the current fiscal year, as per an internal assessment by the finance ministry. As per reports, it stood surplus at $47.5 billion in FY22. The BoP is likely to be deficit because of the slumbering goods trade inconsistency.
A senior finance ministry official, in a news report was quoted as saying, "The balance of payments will remain in deficit this year. Assuming no further major shocks going forward, the shortfall will be $45 to $50 billion this fiscal year, the initial estimation shows."
BoP is a statement of all transactions between entities in one country and the rest of the world over a period of time. It is also known as balance of international payments.
India had a merchandise trade deficit of $148 billion in the first half of FY23. The International Monetary Fund (IMF) has estimated India's FY23 current account deficit (CAD) at $121 billion or 3.5 per cent of GDP. According to reports, in the fourth quarter of FY22, India's current account deficit slipped to $13.4 billion from $22 billion in the previous quarter. But it grew more than 60 per cent from $8.1 billion in the fourth quarter of FY21.
In FY22, India's CAD stood at $38 billion which is the highest since FY19 of $57 billion. The rise was reported to be because of a strong inflationary environment that led to a rise in the value of imported goods of $189 billion, the highest since FY13 of $196 billion.
"This is a challenging year globally and we will have our own shocks. However, we are still in a comfortable position, and this BoP deficit can be comfortably managed. The pressure on the local currency is likely to continue for some time but a clearer picture will emerge next month. The rupee will be under some strain. However, by mid-December there will be more stability," said the official in a statement.
