India`s CAD projected at 1% of GDP for FY25: CRISIL
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CRISIL in its latest report has said that India's current account deficit (CAD) is to remain in a safe zone at approximately 1 per cent of GDP for fiscal 2025, up from 0.7 per cent in the previous year. While geopolitical risks will require close monitoring, the strong financial inflows and a steady services trade surplus are expected to provide stability.
India's current account deficit (CAD) remained largely stable at $11.2 billion, or 1.2 per cent of GDP, in the second quarter (Q2) of fiscal 2025, compared with $11.3 billion (1.3 per cent of GDP) in the same period last year. However, sequentially, the CAD widened slightly from $10.2 billion (1.1 per cent of GDP) in the first quarter, as reported by the Reserve Bank of India. Despite pressures from a rising merchandise trade deficit, strong services exports and healthy remittances helped keep the CAD manageable.
The overall trade deficit rose to 3.4 per cent of GDP in Q2 FY25 from 2.9 per cent in the year-ago period, with the merchandise trade deficit increasing to 8.2 per cent of GDP from 7.5 per cent. Meanwhile, the services trade surplus rose to 4.9 per cent from 4.7 per cent. Additionally, the primary income account deficit reduced to 1 per cent of GDP from 1.4 per cent, while the secondary income account surplus grew to 3.2 per cent from 2.9 per cent.
