India's BoP Is Likely To Slip Into Deficit Of $40-$50 Billion: Report The International Monetary Fund has estimated India's FY23 current account deficit (CAD) at $121 billion or 3.5 per cent of GDP
By Teena Jose
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India's Balance of Payments (BoP) has likely to slip into a deficit of $40 to $50 billion in the current fiscal year, as per an internal assessment by the finance ministry. As per reports, it stood surplus at $47.5 billion in FY22. The BoP is likely to be deficit because of the slumbering goods trade inconsistency.
A senior finance ministry official, in a news report was quoted as saying, "The balance of payments will remain in deficit this year. Assuming no further major shocks going forward, the shortfall will be $45 to $50 billion this fiscal year, the initial estimation shows."
BoP is a statement of all transactions between entities in one country and the rest of the world over a period of time. It is also known as balance of international payments.
India had a merchandise trade deficit of $148 billion in the first half of FY23. The International Monetary Fund (IMF) has estimated India's FY23 current account deficit (CAD) at $121 billion or 3.5 per cent of GDP. According to reports, in the fourth quarter of FY22, India's current account deficit slipped to $13.4 billion from $22 billion in the previous quarter. But it grew more than 60 per cent from $8.1 billion in the fourth quarter of FY21.
In FY22, India's CAD stood at $38 billion which is the highest since FY19 of $57 billion. The rise was reported to be because of a strong inflationary environment that led to a rise in the value of imported goods of $189 billion, the highest since FY13 of $196 billion.
"This is a challenging year globally and we will have our own shocks. However, we are still in a comfortable position, and this BoP deficit can be comfortably managed. The pressure on the local currency is likely to continue for some time but a clearer picture will emerge next month. The rupee will be under some strain. However, by mid-December there will be more stability," said the official in a statement.
