CAD refers to the difference between inflow and outflow of foreign exchange that has a bearing on exchange rate.
Mumbai, May 14 (PTI) The massive spike in trade deficit caused by sharp rise in gold imports in April would not sustain and there is no need to get excessively worried over the data, analysts have said. They also said the current account deficit or the difference between the foreign exchan ...
'Investors looking at the next 6-12 months can be certain that the Fed will maintain its easing cycle, and we expect the overall environment to be conducive for fixed income investments for portfolio diversification.'
The two leaders also took positive note of the growing bilateral cooperation in defence, counter-terrorism and energy, besides the co-ordination on regional and global issues, the officials said.
The trade deficit marginally narrowed to $12.5 billion last month from $12.8 billion in July.
With trade deficit falling 24% in Apr-Dec and stable capital flows, FY14 may end with a balance-of-payments surplus.
'They are geopolitical, commercial, educational, cultural and about innovation.' 'Also, they are about a common value system.'
The rupee slipped 13 paise to 77.67 against the US dollar in early trade on Tuesday, weighed down by the surge in crude oil prices. At the interbank foreign exchange, the rupee opened at 77.65 against the American dollar, then lost ground to quote at 77.67, registering a fall of 13 paise from the last close. On Monday, the rupee settled at 77.54 against the US dollar.
India's exports jumped 45.17 per cent to $33.14 billion in August as against $22.83 billion in the same month last year, according to the commerce ministry's provisional data. The exports during April-August 2021 stood at $163.67 billion, an increase of 66.92 per cent over $98.05 billion in the same period a year ago, the data showed.
The current account deficit, the difference between outflow and inflow of foreign exchange, would be about 2.3 per cent of gross domestic product because of the fall in gold and non-essential imports, the financial services major said in a report.
Exim Bank pointed out that recent performance of the manufacturing sector in India is indicative of an underlying inertia.
The Indian rupee is expected to trade between 80 and 84 against dollar in the first three months of 2023 with support from overseas inflows though worsening current account deficit (CAD) and reduced interest rate differential between the US and India pose challenges. According to a Business Standard Poll of 10 participants, most said the rupee could gain strength in January due to foreign inflows, and the Reserve Bank of India (RBI) is not expected to allow the currency to depreciate ahead of the Union Budget scheduled on February 1. The rupee depreciated 10.15 per cent in 2022, its worst performance since 2013 as the war in Europe and the interest rate increase by the US Federal Reserve prompted investors to flee emerging markets.
Weakness in other currencies against the dollar overseas, after US Fed indicating interest rates could rise earlier than expected as the jobs market picking up, also put pressure on the local unit, forex dealers said.
The country's current account deficit is likely to decline to 1.1-1.2 per cent of the gross domestic product in the third quarter, say rating agencies.
'In the new coalition government, India's reform agenda may prioritise job creation and factor market reforms.'
In FY 2012-13, the country's merchandise exports had aggregated at $ 300.4 billion.
"According to the global financial services major, though CAD at 3.2 per cent of GDP is significantly lower than the 4.8 per cent it registered in fiscal year 2012-13 ", it still remains higher than the 2.4 per cent of GDP that we estimate as the optimal current account deficit".
Imports too rose by 10.4 per cent to $37.8 billion during the last month, leaving a trade deficit of $12 billion.
The country's exports jumped by 60.29 per cent to $34.45 billion in March even as the outbound shipments contracted by 7.26 per cent during the full 2020-21 fiscal to $290.63 billion. Imports too grew by 53.74 per cent to $48.38 billion in March, but dipped by 18 per cent to $389.18 billion during April-March 2020-21, according to the government data released on Thursday. Trade deficit during March 2021 widened to $13.93 billion from $9.98 billion in March 2020.
India needs to make use of this opportunity to significantly enhance its exports especially in information and communications technology and the automotive sector.
India's current account surplus moderated to $15.5 billion or 2.4 per cent of the GDP in the July-September quarter of the current fiscal, the RBI said on Wednesday. The same was at $19.2 billion or 3.8 per cent of the GDP in the preceding three-month period on account of a rise in the merchandise trade deficit, the RBI said in a statement on 'Developments in India's Balance of Payments during the Second Quarter (July-September) of 2020-21'. It is for the third consecutive quarter that India's current account remained in surplus. In the last quarter of 2019-20, the surplus was $0.6 billion. Current account deficit/surplus reflects the difference between the outflow and inflow of foreign exchange in a country's current account.
Yuan's fall would worsen India's trade deficit with China.
Though the government has been pushing for exports of high-value manufactured goods across major markets in place of raw materials and input goods, India's top exports to China remain in the raw materials category.
Both the government and RBI are expecting the CAD to be below $56 billion in the current fiscal compared to the record high of $88.2 billion, or 4.8 per cent of the GDP last fiscal.
Indian growth in the rest of this fiscal year and next will be propelled by robust domestic consumption as consumer confidence improves, and by investment, including large increases in government capital expenditure, according to the Asian Development Outlook September 2023. "As slowing exports could foment headwinds for the economy, and erratic rainfall patterns are likely to undermine agricultural output, the growth forecast for FY2023 is revised down marginally to 6.3 per cent," ADB said.
'... as has been happening in the last three weeks, then the foreign exchange reserves will not be comfortable to ensure that the rupee does not fall drastically.'
The Survey is authored by Chief Economic Advisor V Anantha Nageswaran and his team.
The government on Friday approved an electric-vehicle policy, under which duty concessions will be given to companies setting up manufacturing units in the country with a minimum investment of $500 million, a move aimed at attracting major global players like US-based Tesla. According to an official statement, the companies setting up manufacturing facilities for e-vehicles will be allowed to import a limited number of cars at lower customs duty. The policy seeks to promote India as a manufacturing destination for EVs and attract investment from reputed global EV manufacturers, it added.
India will not tailor its policies to suit US EV maker Tesla, and its laws and tariff rules will be formulated to attract all-electric vehicle manufacturers from across the world to set up a base in the world's fastest-growing economy, Commerce and Industry Minister Piyush Goyal said. Tesla has been seeking an initial tariff concession that would allow it to offset 70 per cent customs duty for cars priced less than $40,000, and 100 per cent for cars of higher value.
This hard-fought win also brings relief to Mohun Bagan manager Jose Molina, who had faced 'Go Back' chants at this very venue on Wednesday during their draw in the AFC Cup.
'India has the potential to reduce its trade deficit with China by $8.4 billion in FY21.'
The Reserve Bank of India (RBI) has identified "climate shocks" as a risk to food inflation rates and overall price rise while stating that the outlook for the country's economic growth remains bright. In its Annual Report for 2023-24, released on Thursday, the central bank said easing supply-chain pressures, broad-based softening in core inflation, and early indications of an above-normal southwest monsoon meant well for the inflation outlook in 2024-25. "The increasing incidence of climate shocks, however, imparts considerable uncertainty to the food inflation and overall inflation outlook," said the RBI while noting headline inflation moderated by 1.3 percentage points on an annual average basis to 5.4 per cent in 2023-24.
The rupee came under pressure on demand from importers as the dollar strengthened overseas.
Forex dealers said besides strong demand for the American currency from importers, capital outflows mainly weighed on the domestic currency.
'We had tremendous faith in honorable Modiji in his second term as he was well-settled. Sadly that has been belied.'
Equity benchmarks snapped their six-session rally to close marginally lower on Thursday amid profit booking in banking and energy counters. Investors also stayed on the sidelines ahead of the RBI's policy meet outcome on Friday. In choppy trade, the 30-share BSE Sensex ended 51.73 points or 0.09 per cent lower at 58,298.80. During the day, it hit a low of 57,577.05 and a high of 58,712.66.
China has emerged as India's largest trade partner.
The country's current account deficit is likely to hit a three-year high of 1.8 per cent or $43.81 billion in FY22, as against a surplus of 0.9 per cent or $23.91 billion in FY21, a report said on Thursday. According to an assessment by India Ratings, the Current Account Deficit (CAD) has moderated to $17.3 billion or 1.96 per cent of GDP in the fourth quarter of FY22 as against $8.2 billion or 1.03 per cent in the year-ago period, and massively down from $23.02 billion or 2.74 per cent in Q3, which was a 13-quarter high. The improvement in the key numbers are due to the remarkable improvement in merchandise exports in FY22, when it grew 42.4 per cent as against a negative 7.5 per cent in the pandemic-hit FY121.
India's gold and silver imports from its free trade agreement (FTA) partner UAE have skyrocketed 210 per cent to $10.7 billion in 2023-24 and there is a need to potentially revise the concessional customs duty rates under the pact to mitigate the arbitrage driving this surge, a report said on Monday. Economic think tank Global Trade Research Initiative (GTRI) said this sharp rise in gold and silver imports is primarily driven by import duty concessions granted by India to the UAE under the India-UAE Comprehensive Economic Partnership Agreement (CEPA).
India's economic growth is now 'extremely fragile' and needs all the support that it can get, as private consumption and capital investment are yet to pick up, RBI Monetary Policy Committee (MPC) member Jayanth R Varma said on Friday. Varma further said out of the four engines of growth for the economy, exports and government spending supported the Indian economy through the pandemic, but other engines need to pick up the baton now. " I like to think in terms of the four engines of growth for the economy: exports, government spending, capital investment and private consumption. "...while exports cannot be the main driver of growth because of the global slowdown, government spending is necessarily limited by fiscal constraints," he told PTI.
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