Question

According to Economic Survey of 2019-2020, current account deficit has contracted to ______ of GDP in 2019-2020 (April-September) from 2.1% in 2018-2019.
1. 1.4%
2. 1.7%
3. 1.5%
4. 1.2%

Answer 1

Correct Answer - Option 3 : 1.5%

The Correct Answer is "1.5%".

India’s Economic Performance in 2019-20 :

 

• The government is expected to further ease the foreign direct investment (FDI) norms with a view to bridge the widening current account deficit (CAD), according to the Economic Survey 2018-19.
• Current Account Deficit (CAD) narrowed to 1.5 % of GDP in H1 of 2019-20 from 2.1 % in 2018-19.
• The CAD, which is the net of foreign exchange inflows and outflows, had stood at USD 48.7 billion in 2017-18.
• It said the widening of CAD has been driven by a deterioration of trade deficit from 6 percent of GDP to 6.7 percent across the two years.
• Rise in crude prices in the fourth quarter of 2018-19 and a decline in the growth of merchandise exports has led to the deterioration of trade deficit, it added.
• FDI inflows into India have dipped marginally by one per cent to USD 44.37 billion in 2018-19.

 

• The current account deficit is a measurement of a country’s trade where the value of the goods and services it imports exceeds the value of the products it exports.
• The current account includes net income, such as interest and dividends, and transfers, such as foreign aid, although these components make up only a small percentage of the total current account.
• The current account represents a country’s foreign transactions and, like the capital account, is a component of a country’s balance of payments (BOP).
• A current account deficit indicates that a country is importing more than it is exporting.
• Emerging economies often run surpluses, and developed countries tend to run deficits.
• A current account deficit is not always detrimental to a nation's economy—external debt may be used to finance lucrative investments.