India’s current account saw a deficit of $23

Solution

India’s current account saw a deficit of $23 billion or 2.7% of the gross domestic product (GDP) in Q3FY22. The gap since the second quarter of Q2FY19, mainly owing to a widening of the merchandise trade deficit to an unprecedentedly high $60 billion. December quarter also witnessed net portfolio outflows of $1.6 billion. In Q2FY22, the current account deficit (CAD) came in at a moderate 1.3% of GDP, while the account had a surplus of 0.9% of GDP in the previous quarter. The capital account had a surplus of only $23.2 billion in Q3FY22, compared with $40.4 billion in the previous quarter and $33.5 billion in the year-ago quarter. Financial account, net foreign direct investment recorded an inflow of $5.1 billion. Portfolio investment recorded net outflow of $5.8 billion. India recorded a current account deficit of 1.2% of GDP in April-December 2021.