Crisil Ratings has projected India's current account deficit (CAD) to Widen to 1 per cent of gross domestic product (GDP) in FY2025. For Q2, CAD is likely to see some uptick owing to subdued goods exports, an increase in imports, and a rise in gems, jewellery and core imports.
Crisil Ratings in a report stated, “ In addition, the impact of geopolitical issues will continue to remain monitorable.” Notably, the current account deficit was 1.1 per cent of GDP, compared with a deficit of 1 per cent in the first quarter of fiscal 2024.
India’s CAD widened to USD 9.7 billion (1.1 per cent of GDP) in the first quarter (April to June) of fiscal 2025, data from the Reserve Bank of India (RBI) showed.
“This compares with a deficit of USD 8.9 billion (1 per cent of GDP) in the first quarter of fiscal 2024. It also signifies a u-turn from a surplus of USD 4.6 billion (0.5 per cent of GDP) in the fourth quarter of the previous fiscal,” Crisil report stated.
Primary income account deficit (1.2 per cent of GDP) was in line with Q1 fiscal 2024. Meanwhile, secondary income account surplus rose marginally to 2.8 per cent from 2.7 per cent.
Net financial inflows were at 1 per cent of GDP, compared with 1.1 per cent in the first quarter of fiscal 2024. Also, the accretion to forex reserves fell to USD 5.2 billion from USD 24.4 billion in Q1 fiscal 2024 and USD 30.8 billion in Q4 fiscal 2024.
