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An article published in the Reserve Bank of India’s (RBI) bulletin has said that India's current account deficit (CAD), a key indicator of balance of payment of a country, is expected to be within 3.0 per cent of GDP in 2022-23 as against 1.2 per cent during the last fiscal. It said the widening trade deficit, or the gap between the value of imports and exports, puts pressure on the balance of payments.  It noted that India's trade deficit during the first five months of 2022-23 widened to $124.5 billion from $54 billion in the previous corresponding period. In the entire fiscal 2021-22, the trade deficit was $189.5 billion.

The article said most importantly, future prices for crude oil contracts over the next few months have softened. International prices of vegetable oils and fertilisers are also looking more benign than before. It noted that there are other bright spots too and added that in August, exports of petroleum products have rebounded y-o-y. Overall, the export target of $750 billion for goods and services for 2022-23 is appearing within reach.

In addition, it said India is cementing its position as the top remittances’ receiver in the world, with inflows touching $90 billion last year and set to create a new record. It said with portfolio flows returning and foreign direct investment remaining strong, this order of deficit is eminently financeable. However, it said the opinions expressed in the article are those of the authors and do not represent the views of the RBI.