Global Investor

Advantage India

Gurumurthy K | Updated on November 22, 2014


When it comes to the current account deficit (CAD), India is in a better position than some of its BRICS (Brazil, Russia, India, China, and South Africa) counterparts, thanks to steps taken by the government. India’s CAD shrunk to $1.2 billion, or 0.2 per cent of GDP, in the January-March quarter this year; in 2012-13, the CAD had hit a record 4.8 per cent of GDP. Narrowing of the deficit was made possible by curbs on gold imports.

This recovery puts India in a better position than Brazil and South Africa, which suffer from a large deficit.

Brazil recorded a wider than expected deficit in April as its CAD increased to $8.29 billion (3.65 per cent of GDP). This was up from a deficit of $6.2 billion in March. The wider deficit was attributed to repatriation by foreign companies increasing by 29 per cent in comparison to last year to $3.29 billion.

Things seem to be on the mend in South Africa, which saw its CAD widen to 6.4 per cent of GDP during the September 2013 quarter due to foreign fund outflows. In the December 2013 quarter, the CAD narrowed to $16.6 billion, or 5.1 per cent of GDP. A pick-up in exports after the end of labour strikes at mines and car manufacturers gave support to the revival.

Among the BRICS nations, China and Russia run a current account surplus. China had surplus of $182.8 billion in 2013, which is 2 per cent of its GDP, down from 2.6 per cent in the previous year. Russia recorded a surplus of $32.76 billion in 2013, which is 1.5 per cent of its GDP.

Published on June 15, 2014

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