BackIndia's current account deficit ‘manageable’: RBI governor Shaktikanta Das
He added that slowing global demand was weighing on merchandise exports, though the country's exports of services and remittances remained strong.
PremiumThe Reserve Bank of India (RBI) governor Shaktikanta Das on Friday said that India's current account deficit is ‘eminently manageable5’ and within the parameters of viability.
He said this at a a conference in Dubai, according to a copy of the speech released by the central bank.
India’s current account deficit (CAD) widened to a nine-year high of 4.4% of gross domestic product (GDP) in the three months to September, up from 2.2% in the June quarter, primarily due to a widening goods trade deficit and an increase in net outgo under investment income.
He said the average current account deficit to GDP ratio stands at 3.3 in first half of FY23. He added that slowing global demand was weighing on merchandise exports, though the country's exports of services and remittances remained strong.
"Though slowing global demand is weighing on merchandise exports, our services exports and remittances remain strong. The net balance under services and remittances remains in a large surplus, partly offsetting trade deficit. Consequently, the current account deficit is eminently manageable and within the parameters of viability," he said.
The net balance under services and remittances remains in a large surplus, partly offsetting the trade deficit, said RBI governor Shaktikanta Das.
"On the external front, de-globalisation and protectionism are gaining ground as witnessed during the recent global supply-chain shock. It is thus necessary to build and strengthen bilateral trade relations to deal with such challenges. India has recently signed bilateral trade agreements with the UAE and Australia and more such agreements are works in progress," he said.
As global environment has turned hostile and uncertain, Indian economy remains resilient, said Das.
He pointing to a strong financial system in the country and deleveraged corporate balance sheets.
Headline retail inflation in the country has cooled in the past couple of months, but broadly remains high, having hovered at the upper end of the central bank's tolerance band of 2%-6% for the better part of the year.
"Core inflation, however, remains sticky and elevated," he said.
(with inputs from agencies)
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