CAD widens to 2.5 pc of GDP in Q3

The country's current account deficit widened to 2.5 per cent of GDP in third quarter of the current fiscal from 2.1 per cent a year ago, primarily on account of a higher trade deficit, the RBI said Friday. In absolute terms, the CAD, or the gap between inflow and outflow of foreign exchange in the current account, was USD 16.9 billion in the October-December 2018 period, up from USD 13.7 billion in the year-ago period.

The deficit, however, had moderated to USD 19.1 billion or 2.9 per cent of GDP in the preceding quarter (July-September).

"The widening of the CAD (current account deficit) on a year-on-year basis was primarily on account of a higher trade deficit at USD 49.5 billion as compared with USD 44.0 billion a year ago," the Reserve Bank of India (RBI) said in a statement.

The CAD increased to 2.6 per cent of GDP during the April-December 2018 period, from 1.8 per cent in April-December 2017 on the back of widening of the trade deficit.