India's Current Account Deficit Seen Below 1% For FY24, Says RBI Governor
Our current account deficit has remained very low, compared to very high numbers from past years, Das said
India's current account deficit for the year ended March 2024 is likely to remain below 1% of the gross domestic product, Reserve Bank of India Governor Shaktikanta Das said on Tuesday.
"Our current account deficit has remained very low, compared to very high numbers from past years," Das said at ET Now's Leadership Dialogues 2024.
He said the current account deficit from April-December 2023 has narrowed to 1.2% of GDP. This is on account of robust demand for India's services from across the world, especially information technology, accountancy, legal services and more, Das added.
As per RBI's provisional figures, India's services exports grew by 4.2% in the March quarter, while services imports contracted by 0.1% during the same period. Net services exports grew by 9.3%.
"Notwithstanding the fact that global growth (of 3.2% projected by IMF for FY25) is below historical trends, it means external demand will continue to be strong and give lot of support to services exports," he said.
The phenomenal rise of global capability centres in India has provided a significant boost to India's software and business services exports, Das had said in his monetary policy address on June 11. As per Nasscom data cited by RBI, the number of global capability centres in India is expected to reach 1,900 by the end of financial year-ending March 2025, from around 1,580 in the financial year-ended March 2023.
Das had highlighted that a lower trade deficit, along with robust services export growth and strong remittances would result in moderation of India's current account deficit in March quarter. Overall, the current account deficit for fiscal year 2025 is expected to remain well within its sustainable level, he had said.
Further, Das highlighted a pick up in private investment cycle now, which would bolster economic growth going forward.
He also underlined that large foreign currency reserves of $655.8 billion accumulated in its coffers as on June 7 would help central bank to maintain stability in the markets.
"We'll continue to build up reserves opportunistically...so that strong reserves give confidence to international investors that India will be able to fulfill its external payment obligations," Das said.
