The Economic Survey of India, released on Tuesday, cautioned that India's current account deficit (CAD) needs to be closely monitored. Increased inflationary pressure in emerging economies like India, resulting from rate hikes in the US, is cited as one reason for India's widening CAD.
The report further said, "The widening of the CAD may also continue as global commodity prices remain elevated and the growth momentum of the Indian economy remains strong."
The survey, tabled in the Parliament earlier today by Finance Minister Nirmala Sitharaman, added that although the widening CAD can put the Indian Rupee under depreciation pressure, the overall external condition remains manageable. "India has sufficient forex reserves to finance CAD and intervene in forex market to manage rupee volatility.
