Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Market / Mark-to-market/  A closer look shows that not all is well with the current account deficit
BackBack

A closer look shows that not all is well with the current account deficit

While the improvement in the current account position is welcome, a closer look shows a less rosy picture

The chart also shows that exports of services as a percentage of GDP has come down a bit, mirroring the problems faced by India’s information technology firms.Premium
The chart also shows that exports of services as a percentage of GDP has come down a bit, mirroring the problems faced by India’s information technology firms.

There has been a vast improvement in India’s current account deficit from the days of the taper tantrum in 2013. From a deficit of 4.75% of gross domestic product (GDP) in the June 2013 quarter, it has come down to 1.15% of GDP in the September 2017 quarter (see Chart 1).

But how was this improvement achieved? It wasn’t because exports did well. Chart 2 shows that exports of goods fell from 18.79% of GDP in the September 2013 quarter to 12.16% in the September 2017 quarter.

Thankfully, the fall in imports of goods has been even steeper, as Chart 2 shows. This is to a large extent the effect of lower crude oil prices, but it also reflects the lack of capital expenditure in the economy.

The chart also shows that exports of services as a percentage of GDP has come down a bit, mirroring the problems faced by India’s information technology firms.

In short, while the improvement in the current account position is welcome, a closer look shows a less rosy picture.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 15 Dec 2017, 07:42 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App