India's Q3 CAD Widens To 2.5% Of GDP

India's current account deficit widened (CAD) to 2.5 percent of GDP (gross domestic product) in the third quarter of the current fiscal 2018-19 from 2.1 percent a year ago, primarily on account of a higher trade deficit despite a surge in foreign exchange reserves.

"The widening of the CAD (current account deficit) on a year-on-year basis was primarily on account of a higher trade deficit at USD 49.5 billion as compared with USD 44.0 billion a year ago," the RBI said in a statement.

Further, data released by the Controller General of Accounts (CGA) revealed that the central government's fiscal deficit (i.e. the gap between expenditure and revenue receipts) had crossed 134 percent of the whole year's revised budget estimates (RE) at February-end.

While there are apprehensions that the government may breach the fiscal deficit target, Economic Affairs Secretary Subhash Chandra Garg exuded confidence that target of 3.4 percent of the GDP for the current fiscal would be met.

Releasing the data on balance of payments, the Reserve Bank said that in absolute terms, the CAD or the gap between inflow and outflow of foreign exchange in the current account was USD 16.9 billion in October-December 2018, up from USD 13.7 billion in the year-ago period.

CAD increased to 2.6 percent of GDP during the April-December 2018 period, from 1.8 percent in April-December 2017 on the back of widening of the trade deficit.