Context
According to the data released by RBI, the current account deficit of India galloped to $23 billion or 2.7 % of GDP in the 3rd quarter ended December,2021.
Current account deficit
- CAD is a component to measure the trade balance of a country. It indicates a situation where the value of the goods and services imported by the country exceeds the value of the product it exports.
- It includes the net income received which is the difference between total money received and total money spent outside by the country including interest and dividends, remittances, FDI, foreign aid, etc.
- The current account also expresses the difference between national (both public and private) savings and investment, hereby CAD reflects a low level of national savings relative to investment or a high rate of investment or both.
- India`s CAD is largely due to its dependence on oil imports .
