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Behind the lower CAD in Q3FY23 was the narrowing of the merchandise trade deficit to $72.7 billion from $78.3 billion in Q2FY23, coupled with robust services and private transfer receipts, said the Reserve Bank of India (RBI).
Aditi Nayar, chief economist, head-research & outreach, ICRA, said: “Following the downward revision in the Q2FY23 current account deficit, the CAD for Q3 was well below expectations. The estimates for Q2FY23 were revised from a deficit of $36.4 billion (4.4 per cent of GDP).”
Private transfer receipts, mainly representing remittances from Indians employed overseas, amounted to $30.8 billion, an increase of 31.7 per cent per cent YoY.
For April-December 2022 (M9FY23), the country’s CAD expanded to 2.7 per cent of GDP, against 1.1 per cent of GDP M9FY22, due to a sharp increase in the merchandise trade deficit. Net invisible receipts were higher in M9FY23, on account of higher net receipts of services and private transfers.
With a considerable compression in the average trade deficit in January-February 2023 relative to the previous three months, the CAD is expected to recede further to $10-12 billion in Q4FY23, Nayar said.
For FY23, it is projected to be in the $77-80 billion range (2.3 per cent of GDP), which appears to be contained as compared to the levels that were being feared in mid-2022, ICRA added.
First Published: Mar 31 2023 | 7:01 PM IST
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