Dr V Anantha Nageswaran, the Chief Economic Advisor to the government of India, today said that he expected the current account deficit for 2023-24 to be under 2 per cent of the GDP.

Current account deficit (CAD) is a measure of a country’s trade balance in goods, services and income and current transfers with the rest of the world, which is financed by foreign investment.

As such, in the current year, financing of the CAD will be “less of a challenge,” he said, while delivering a speech for the Federation of Indian Chambers of Commerce and Industry (FICCI), here.

“This is welcome at a time when foreign direct investments, globally and not just into India, are slowing down because companies are re-shoring rather than off-shoring, due to geopolitical issues and security concerns.”

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Conceptually, foreign direct investment, as opposed to portfolio investment, is considered to be investment motivated by long-term interest that is substantially locked into fixed capital expenditures.

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Dr Nageswaran began his speech by saying that the government of India revises the GDP estimates six times and he was confident that when the final numbers come, India’s GDP for 2022-23 would be shown as higher than 7.2 per cent.

While not being “unmindful” of the challenges to growth, he said that he did not see any major challenge due to the slowdown elsewhere in the world because both the US and the EU were doing better than expected.

A member of the audience asked him about the prospects of de-dollarization and rupee trade. To this, Dr Nageswaran responded by saying that moving out of dollar-based invoicing was a “multi-decade process” because “there is no obvious alternative to the dollar.”

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