Poll suggests positive current account balance for India in Jan-Mar period

India's current account likely turned to surplus in January-March: Poll

India's current account balance turned positive in the January-March period, according to a Reuters poll. This marks the first quarterly surplus in nearly two years on a narrower trade deficit and an increase in services exports.

As per the survey of 22 economists, the current account balance is anticipated to have recorded a surplus of $3.3 billion, or 0.4 percent of gross domestic product (GDP), in the fourth quarter of fiscal 2022-23.

This marks a significant improvement from the previous quarter's deficit of $18.2 billion, or 2.2 percent of GDP. The forecast range spread wide from a deficit of $5.0 billion to a surplus of $7.8 billion.

"While we expect the merchandise trade deficit to narrow, backed by moderating global commodity prices, the invisibles trade balance should remain steady at previous quarter levels, with services exports picking up," said Upasana Chachra, chief India economist at Morgan Stanley,

"On the capital account front, we expect foreign flows to slow. With regard to the overall (balance of payments), we anticipate the surplus to remain largely steady, similar to previous quarters' levels," she further added.

As per the poll, the balance of payments was forecast in a surplus of $9.8 billion last quarter, compared with $11.1 billion in the preceding three-month period.

The current account deficit (CAD) was predicted to average -1.5 percent of GDP this fiscal and -1.8 percent next, compared with -2.0 percent seen in the previous fiscal, as per another Reuters poll last week.

Prasenjit K Basu, chief economist at ICICI Securities, expects the trade deficit to shrink on lower oil prices. This will ensure that the CAD narrows further, Basu said.