Current account deficit surges to $9.2 billion in June quarter

The CAD in January-March was $1.3 billion, or 0.2 percent of GDP. In April-June 2022, it stood at $17.9 billion, or 2.1 percent of GDP.

While India's services trade surplus rose to $35.1 billion in April-June 2023 from $31.1 billion a year ago, it was lower than the $39.1 billion recorded in January-March 2023. Similarly, the merchandise trade deficit improved to $56.6 billion from $63.1 billion but was higher than $52.6 billion in January-March 2023.

"Net services receipts decreased sequentially, primarily due to a decline in exports of computer, travel and business services," the RBI said.

On the whole, India's trade deficit in April-June 2023 was $21.5 billion, down from $32.0 billion in April-June 2022 but higher than $13.5 billion in the first quarter of 2023.

Economists think matters are going to get worse on the external front for India.

According to Madhavi Arora, lead economist at Emkay Global Financial Services, the September quarter will see a "substantial widening of CAD" on account of higher oil, higher core imports and further slowing of services exports.

"All of this will imply July-September 2023 CAD/GDP ratio could be more than double of April-June 2023 - ranging from 2.4-2.6 percent," Arora said.

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Aditi Nayar, ICRA's chief economist, broadly agreed with Arora, forecasting a widening of the CAD to $19 billion-$21 billion, or 2.3 percent of GDP, in July-September 2023.

"Overall, ICRA projects the CAD to widen to $73 billion-$75 billion (2.1 percent of GDP) in 2023-24 from $67.0 billion (2.0 percent of GDP) in 2022-23, building in an average crude oil price of $90/barrel in October 2023-March 2024," Nayar added.