CAD may be less than $25 bn: Barclays
India’s current account deficit (CAD) remains in check and is expected to be lesser than $25 billion this fiscal, says a report.
According to financial services major Barclays, though the underlying growth in the country is improving, it is unlikely to put significant pressure on the current account.
“Overall, we believe India’s external sector appears well placed and expect it to remain so in the coming quarters,” Barclays said in the report.
India is a large beneficiary of lower crude oil prices, and FDI inflows remain on a relatively strong footing and help to offset the portfolio outflows seen in recent months, according to the report.
India’s CAD narrowed to 1.6 per cent of GDP at $8.2 billion in the second quarter ended September. It is, however, higher than 1.2 per cent for the April-June quarter of this fiscal. The deficit for the first half of this fiscal stood at $14.3 billion.
The performance of India’s external sector remains robust and that financing the current account deficit has not been a challenge, according to the brokerage.
“Given the recent sharp decline in oil prices, we see rising risks that the current account deficit will be smaller than our projection of $25 billion,” the report said adding “we believe underlying growth in India is improving, but it is unlikely to put significant pressures on the current account”.
Read full article: The Hindu
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