India's Current Account Deficit: A Balancing Act

Commerce and Industry Minister Piyush Goyal asserts that India's current account deficit is manageable, pointing to robust services exports. He highlights that a significant portion of imports are linked to exports, helping maintain a net CAD of around one percent of GDP, alleviating serious concerns.

In a statement addressing concerns over India's economic health, Commerce and Industry Minister Piyush Goyal expressed confidence in the country's ability to manage its current account deficit (CAD) effectively. Speaking at an event, Goyal noted that India's services exports are a crucial factor in offsetting the trade imbalance.

Despite a trade deficit of USD 250-300 billion, Goyal explained that nearly USD 175-200 billion is compensated through services exports. As a result, India's net CAD remains around one percent of GDP, a figure he considers non-alarming. The country's CAD slightly widened to USD 9.7 billion or 1.1 percent of GDP in April-June 2024, compared to USD 8.9 billion or one percent in the previous year.

Goyal emphasized the strong correlation between imports and exports, citing that many imported goods undergo value addition before being re-exported. He pointed to remittances and foreign investments as stabilizing factors but acknowledged bureaucratic hurdles affecting investment timelines. Goyal stressed India's focus on reciprocity and maintaining the sanctity of incoming financial flows.

(With inputs from agencies.)