RBI Governor says current account deficit ’eminently manageable’

Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said that the current account deficit is “eminently manageable” and within the parameters of viability. He also emphasised that in the current hostile and uncertain international environment, the Indian economy remains resilient, drawing strength from its macroeconomic fundamentals. “Our financial system remains robust and stable. Banks and corporates are healthier than before the crisis. Bank credit is growing in double digits. India is widely seen as a bright spot in an otherwise gloomy world. Our inflation remains elevated, but there has been a welcome softening during November and December 2022. Core inflation, however, remains sticky and elevated,” he said, while delivering a keynote address at the 22nd Fixed Income Money Market and Derivatives Association of India- Primary Dealers Association of India’s (FIMMDA-PDAI) annual conference in Dubai. “Despite slowing global demand weighing on merchandise exports, India’s exports of services and remittances remain strong. The net balance under services and remittances remains in a large surplus, partly offsetting the trade deficit,” he said. The average current account deficit to GDP ratio stood at 3.3 per cent during the first half of the current fiscal, while the slowing demand is weighing on merchandise exports, Das said, adding that at the same time “our exports of services and remittances remain strong. The net balance under services and remittances remains in a large surplus, partly offsetting the trade deficit”. Das further noted that in the aftermath of multiple shocks, the global economy is projected to contract significantly in 2023, adding at the same time that “the worst for the global economy, both in terms of growth and inflation, seems to be behind us”. Lately, with some ebbing of Covid-related restrictions and cooling of inflation in various countries, though still elevated, central banks have started what appears t