Current account deficit for first half of 2022-23 at 3.3 pc of GDP: RBI Guv

Mumbai (Maharashtra) [India], February 8 (ANI): The current account deficit (CAD) for the first half (H1) of 2022-23 stood at 3.3 per cent of gross domestic product (GDP), Reserve Bank of India’s Governor Shaktikanta Das said on Wednesday.

The governor said, “The situation has shown improvement in Q3:2022-23 (third quarter or October-December) as imports moderated in the wake of lower commodity prices, resulting in narrowing of the merchandise trade deficit.” Further, the governor said services exports rose by 24.9 per cent (y-o-y) in Q3:2022-23, driven by software, business and travel services. “Global software and IT services spending is expected to remain strong in 2023.”

While speaking on the outcome of the Monetary Policy Committee meeting of RBI today, Shaktikanta Das said remittance growth for India in H1 (the first half) of 2022-23 was around 26 per cent – more than twice the World Bank’s projection for the year. “This is likely to remain robust owing to better growth prospects of the Gulf countries,” he said.

The central bank Governor said, “The net balance under services and remittances is expected to remain in a large surplus, partly offsetting the trade deficit. The CAD is expected to moderate in H2:2022-23 and remain eminently manageable and within the parameters of viability.”
The RBI Monetary Policy Committee, led by Governor Shaktikanta Das, hiked the repo rate by 25 basis points to 6.5 per cent on Wednesday.

According to the governor, a rate hike of 25 basis points is considered as appropriate at the current juncture. “The reduction in the size of the rate hike provides the opportunity to evaluate the effects of the actions taken so far on the inflation outlook and on the economy at large,” he added.
Das-headed MPC started its three-day meeting on February 6 amid the rate hiking spree that started in May last year to check inflation.

The MPC comprises three RBI officials and three external members who are appointed by the central government. This week’s monetary policy is seen as crucial as it will be the RBI’s first policy stance for the calendar year 2023 and comes exactly one week after Finance Minister Nirmala Sitharaman unveiled the Union Budget 2023-24 in Parliament on February 1.

The RBI members include Governor Das, Executive Director Rajiv Ranjan and Deputy Governor Michael Debabrata Patra.

The external members are National Council of Applied Economic Research Senior Advisor Shashanka Bhide; Indira Gandhi Institute of Development Research Emeritus Professor Ashima Goyal; and Indian Institute of Management-Ahmedabad Professor Jayanth R Varma.