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India Trade Deficit: Current account deficit may remain at 9-year high due to costly imports

India Trade Deficit: The rise in commodity prices due to global factors and the weakening of the rupee against the dollar has made imports costlier, which is going to have an impact on the trade deficit figure. The current account deficit may remain at a decade-high level in the April-June quarter.

Reuters polled 18 economists between September 9 and 15, according to which the current account deficit is estimated to be $30.5 billion, or 3.6 percent of GDP, in the April-June quarter, which will be the highest in nine years. According to the estimates of the total people, it can remain from $ 28.5 billion to $ 34 billion, which can be from 2.4 percent to 5 percent of the GDP. Between January and March 2022, the current account deficit stood at $13.4 billion, or 1.5 per cent of GDP.

The effect of current account deficit is being seen on the currency. Banks of all countries are making loans expensive to check inflation. RBI’s foreign exchange reserves are decreasing and it may decrease further in the coming time. The rupee has depreciated 7 per cent since January 2022. So after 2013, there has been a weakness in the rupee by 20 percent. And this weakness may continue. At present, the rupee is trading at 79.74 against a dollar.

The government has increased the import duty on gold to reduce the trade deficit. The effect of which will be visible only in the current quarter.

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