Current account deficit to remain moderate, eminently manageable: RBI

Mumbai: Reserve Bank Governor Shaktikanta Das on Thursday excuded confidence that India's current account deficit (CAD), a key external sector indicator, is likely to remain moderate in the January-March quarter of 2022-23 and also eminently manageable going forward.

The CAD for the first three quarters of 2022-23 stood at 2.7 per cent of GDP.

In the October-December quarter, CAD narrowed significantly to 2.2 per cent from 3.7 per cent in the preceding three months on account of lower merchandise trade deficit and robust growth in services exports.

"Overall, our external sector indicators have improved significantly. Foreign exchange reserves have rebounded from USD 524.5 billion on October 21, 2022 and now stand in excess of USD 600 billion taking into account our forward assets," Das said while unveiling the bi-monthly monetary policy.

Das said India's services exports continued to grow at a healthy pace in the first two months of 2023.

Better growth prospects of the gulf cooperation council (GCC) countries are expected to keep remittances robust.

In fact, inward gross remittances touched an all-time high of USD 107.5 billion during calendar year 2022, he said.

"The CAD is expected to remain moderate in Q4:2022-23 and in the year 2023-24 at a level that is both viable and eminently manageable," the Governor said.

Das further said the Indian Rupee has moved in an orderly manner in the calendar year 2022 and continues to be so in 2023 also.

This is reflective of the strength of domestic macroeconomic fundamentals and the resilience of the Indian economy to global spillovers.

RBI remains watchful and focused on maintaining stability of the Indian rupee, he added.