RBI expects current account deficit to come under 3 per cent in FY23

Mumbai: The Reserve Bank expects the current account deficit to be under 3 per cent of GDP in FY23, Deputy Governor Michael Patra said on Friday.

The CAD will "modestly widen" in the first half of the fiscal year and narrow in the second half, Patra told reporters in the customary post-policy press conference.

"Overall, we expect the current account deficit to be under 3 per cent of GDP (in FY23)," Patra said.

The comments come a day after official data released by the Reserve Bank of India (RBI) showed that the CAD widened in the first quarter of the fiscal to 2.8 per cent of GDP.

In FY22, the CAD had stood at 1.2 per cent of the GDP.

Patra said there are factors beyond the widening trade deficit as the exports are getting hit due to adverse economic developments in the advanced economies, and pointed out certain factors helping the CAD lately.

He said the oil prices have moved south, which will lower the import bill, and there has been a 23 per cent growth in petroleum exports, courtesy the slashing of windfall taxes by the government.

The services exports are doing very well and on the services front, there is a boost coming from the travel segment as tourism has picked up in a big way, he added.