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MUMBAI : India’s current account deficit is eminently manageable and within the parameters of viability, said Reserve Bank of India Governor Shaktikanta Das.

Speaking at the FIMMDA-PDAI Annual Conference in Dubai, Das said the net balance under services and remittances remains in a large surplus, partly offsetting the trade deficit. While slowing global demand is weighing on merchandise exports, exports of services and remittances remain strong, he said.

India’s current account balance recorded a deficit of $36.4 billion, or 4.4% of the GDP, in the September quarter, up from $18.2 billion, or 2.2% of the GDP, in the first quarter. In November 2022, the government’s chief economic advisor said the CAD for the current fiscal year was expected at around 3-3.2%of GDP, which is much higher than 1.2% in the previous year.

According to Das, the global economy is projected to contract significantly in 2023 in the aftermath of multiple shocks. The Indian economy, however, remains resilient, drawing strength from its macroeconomic fundamentals, he added. While inflation has softened during November and December 2022, core inflation remains sticky and elevated.

Das highlighted a few areas for financial market development, including the need to ensure liquidity for retail investors in the government securities market. He also noted that secondary market liquidity in g-secs is currently concentrated in a few securities and tenors.

“A term money market remains absent, notwithstanding a host of facilitative policy measures. Access of the retail segment to markets, especially derivative markets, needs to improve further," he said. “In the forex markets, while corporates benefit from the tight bid-ask spreads, smaller users continue to face pricing disadvantages notwithstanding regulatory requirements for fair and transparent pricing."

Gopika Gopakumar
Gopika Gopakumar has worked for over 15 years as a banking journalist across print and television media. Her expertise lies in breaking big corporate stories and producing news based TV shows. She was part of the 2013 IMF Journalism Fellowship Program where she covered the Annual & Spring meetings of the International Monetary Fund in Washington D.C. She started her career with CNBC-TV18, where she also produced a news feature show called Indianomics and an award winning show on business stories from South India called Up South. She joined Mint in 2016.
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