Chinese cargo vessel 'San Fernando' arrives at the Vizhinjam international sea port, marking the first container ship's arrival at the newly-built port
Credit: PTI File Photo
New Delhi: India's current account deficit is likely to decline to a three-quarter low of 1 per cent of GDP in October-December 2024 period and may turn into surplus in the fourth quarter of FY25 due lower imports, India Ratings and Research (Ind-Ra) said on Monday.
In absolute terms, the CAD is estimated to decline to $10 billion in Q3 of the current financial year from $11.2 billion or 1.2 per cent of the country’s gross domestic product (GDP) recorded in the second quarter.
Ind-Ra expects the merchandise exports to increase to a four-quarter high of around $114 billion in January-March quarter of the current fiscal. The merchandise imports, however, are expected to moderate to around $174 billion in Q4 due to lower imports of essential commodities.
Overall, Ind-Ra expects the goods trade deficit to decline to around $60 billion in the January-March quarter. The merchandise trade deficit is likely to be largely offset by the surplus in services trade. The rating agency said in a note that India’s services trade surplus is likely to jump by 21.8 per cent year-on-year to $52 billion in the fourth quarter of the current fiscal.
“All in all, Ind-Ra expects current account balance (CAB) to turn into a surplus of under 1 per cent of GDP in Q4,” said Paras Jasrai, Senior Analyst & Economist, Ind-Ra.
In the October-December quarter merchandise exports were up 3.2% year-on-year. Sequentially, goods exports moved up to $109.0 billion in 3Q from a 12-quarter low of $103.5 billion in Q2.
This was due to the combination of a favourable base effect (Q3 FY24: 1 per cent year-on-year) and a pick-up in demand from major expor