Why the Widening Current Account Deficit is not an Immediate Cause of Worry
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India's current account deficit reached $9.4bn in Q1 FY25, down from a surplus of $4.6bn in Q4 FY24; trade balance deteriorated by $13bn, with Q1 FY25 deficit at $65bn compared to $52bn in Q4 FY24; net invisibles remained steady at a surplus of $55bn; capital account surplus moderated due to softer FII inflows; BoP surplus decreased from $31bn in Q4 FY24 to $5.2bn in Q1 FY25; forex reserves increased by $6bn to $652bn; FY25 CAD projected at 1% of GDP; expected marginal improvement in exports by 2% year-on-year; oil prices softened to $71-72 per barrel; RBI may desire additional reserves to manage future volatility; BoP surplus projected at $40-50bn despite $5bn inflow in Q1.

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