Imports, oil bill raised deficit before conflict

MUMBAI: Rising imports and high oil prices have taken their toll on India’s current account deficit (CAD) even before the Russian invasion of Ukraine. The quarter ended December 2021 saw India’s CAD widen to $23 billion, or 2.7%, of the country’s gross domestic product (GDP).
Releasing the data, the Reserve Bank of India (RBI) said that the widening current account gap was due to pressures on trade deficit, which swelled to $60 billion because of rising imports. Given that prices of crude and international commodities shot up in the fourth quarter significantly, the CAD is expected to get much worse.
The trade deficit, on account of petroleum products, was $26 billion as compared to $16 billion in the corresponding quarter of previous fiscal. The overall deficit due to trade in goods was $60 billion as against $34.6 billion in the third quarter of previous year. Gold imports during the quarter moderated to $14 billion from $16 billion in the preceding quarter.