Current account deficit to 2% of GDP in 2022-23 due to increase in trade deficit

Due to increasing trade deficit, the current account deficit has increased to 2 percent of GDP in 2022-23, while there was a deficit of 1.2 percent in the current account balance in 2021-22. There is a trade deficit of $ 265.3 billion in 2022-23, which was a trade deficit of $ 189.5 billion in 2021-22, due to which there has been a jump in the current account deficit. According to RBI data, there is a current account deficit of $ 67 billion in 2022-23, which was $ 38.7 billion in 2021-22.
However, the current account deficit narrowed in the fourth quarter. India’s current account deficit narrowed in the fourth quarter of FY 2022-23 due to a reduction in the trade deficit and a spurt in service exports. In the fourth quarter of the last financial year, the current account deficit has come down to $ 1.3 billion or 0.2 percent. Whereas in the third quarter of 2022-23, the current account deficit was 2 percent of GDP i.e. $ 16.8 billion. Whereas earlier this deficit was $ 13.4 billion in the fourth quarter of the financial year 2021-22. Releasing this figure, RBI has said that the reason for the decrease in current account deficit quarter by quarter is the decline in trade deficit. While the trade deficit was $71.3 billion in the third quarter, it declined to $52.6 billion in the fourth quarter.
According to the data, net foreign investment stood at $6.4 billion in the fourth quarter, up from $2 billion in the third quarter. But less than $13.8 billion a year earlier. At the same time, FDI inflow in 2022-23 has been $ 28 billion, which is less than $ 38.6 billion in 2021-22. In the fourth quarter of 2022-23, there has been a withdrawal of $ 1.7 billion from foreign portfolio investors due to the sale of foreign investors in the stock market. While an outflow of $ 15.2 billion was seen a year ago.