Mumbai: An India based rating agency, India Ratings predicted that the current account deficit (CAD) of the country may touch a 3-year high this year. As per the report by the agency, the CAD may hit a three-year high of 1.8% or $43.81 billion in 2021-22. CAD was at $ 23.91 billion in 2020-21.
CAD has moderated to $17.3 billion or 1.96% of GDP in the fourth quarter of 2021-22 as against $8.2 billion or 1.03% in 2020-21.
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Current Account Deficit (CAD) is the shortfall between the money received by selling products to other countries and the money spent to buy goods and services from other nations. A current account deficit occurs when the value of imports is greater than the value of exports. If the currency is overvalued, imports will be cheaper, and therefore there will be a higher quantity of imports.
The agency expects predicts merchandise exports to come in at $112.5 billion, growing by 17.7% in the first quarter of 2022-23, up 85.7% over the same quarter last fiscal. Merchandise imports grew 44.1% during April-May 2022 to $120.9 billion and are expected to stand at $182.9 billion.
Import volumes of top exporting partners such as the US and Europe rose 9.7% and 8.3%, respectively, in fourth quarter. As a result, overall exports crossed the $400-billion target, scaling a life-time high of $421.8 billion in 2021-22, up from $296.3 billion in 2020-21, a growth of 42.4%, as against a negative 7.5% in 2020-21.
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