After demonetisation disaster and GDP slowdown, now it has emerged that India’s April-June current account deficit has widened to its highest in four years.
Data from the Reserve Bank of India showed that this was largely due to a surge in imports
The current account deficit widened to 2.4 percent of gross domestic product, or $14.3 billion, as imports pushed the trade deficit to $41.2 billion from $23.8 billion in the same period a year ago, reported Reuters news agency.
The current account deficit was 0.1 percent or $401 million in the quarter ending June last year. It is now at its highest level since the June quarter of 2013.
On 31 August, it was revealed that India’s GDP growth had slumped to a three-year low of 5.7 per cent during April-June — lagging China for the second straight quarter — as manufacturing slowed ahead of the GST launch amid demonetisation effect.
China had clocked a record 6.9 per cent growth in January- March as well as April-June quarters.
Union Finance Minister had also conceded that the latest data on GDP was a matter of concern but blamed the manufacturing going down due to ‘GST impact on destocking.’
A separate set of official data showed that growth of eight core sectors slowed to 2.4 per cent in July due to contraction in output of crude oil, refinery products, fertiliser and cement.
Uncertainty about new indirect tax rates under GST prompted a host of industries, including carmakers, FMCG companies and garment manufacturers, to clear their stocks.
Demonetisation of high-value currency notes in November last year impacted economic activities in the January-March quarter as GDP growth slipped to 6.1 per cent and further to 5.7 per cent in the three months to June.
Prime Minister Narendra Modi had made the shock announcement of declaring India’s 85% currency in circulation in market illegal. Since then, the central government has been unable to check the economic downturn in the country.