India's Current Account Deficit Widenes To 2% Of GDP In Q3FY18

On Friday, RBI data revealed that India's CAD or current account deficit jumped to $13.5 billion which amounts close to 2% of the GDP during the third quarter of 2017-18 against $7.2 billion in the quarter ended September. CAD figure for the October-December period in FY 2016-17, stood at $8 billion.

RBI in a release said, 'India's CAD at $13.5 billion (2 percent of GDP) in Q3 of 2017-18 increased from $8 billion (1.4 percent of GDP) in Q3 of 2016-17 and $7.2 billion (1.1 percent of GDP) in the preceding quarter'.

Current account deficit (CAD) is the excess of country's imports of goods and services



over its export. The ballooning of CAD is primarily attributed to increase in crude oil prices and higher import of electronic goods.

The high CAD figure augurs bad for the economy as it leads to the free fall of domestic currency, hurts stock market sentiment, results in inflation etc.

'The widening of the CAD on a year-on-year (y-o-y) basis was primarily on account of a higher trade deficit ($44.1 billion) brought about by a larger increase in merchandise imports relative to exports.' Crude oil and other petroleum products account for over 40% of the total merchandise import of India.