{"id":116121,"date":"2021-07-02T19:53:20","date_gmt":"2021-07-02T14:23:20","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=116121"},"modified":"2021-07-02T19:53:20","modified_gmt":"2021-07-02T14:23:20","slug":"a-widening-current-account-deficit-is-both-good-news-and-bad","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/a-widening-current-account-deficit-is-both-good-news-and-bad\/","title":{"rendered":"A widening current account deficit is both good news and bad"},"content":{"rendered":"\n

Source:<\/strong> Live Mint<\/a><\/p>\n

Relevance<\/strong>: Some signs like CAD signifies economic recovery<\/p>\n

Synopsis:<\/strong> current account deficit (CAD) of India is widening. It is a piece of mixed news for India.<\/p>\n

India\u2019s current account deficit (CAD) has widened. As per the latest data, it is around 1% of gross domestic product (GDP). It is a relief for the Indian economy because 19% growth in imports is the main factor behind that.<\/p>\n

Why increasing CAD is mixed news for the economy?<\/strong><\/p>\n

Positives:<\/strong> CAD has increased mainly due to an increase in imports, especially non-oil and non-gold. It indicates that economic recovery is picking up the pace. As per experts, faster vaccination would increase the growth rate that would reflect in the CAD by an increase in imports.<\/p>\n

Negatives<\/strong>: However, this increase in imports is also accompanied by a surge in key global commodity prices. From crude oil to steel, prices of most commodities have galloped in the past few months.<\/p>\n

It would result in an increase in domestic inflationary pressures. It would complicate the work of RBI because retail inflation surged to over 6% in April.<\/p>\n

A faster rise in the consumer price index (CPI) inflation momentum compared to the wholesale price index (WPI) shows that producers have begun to pass on their costs to consumers.<\/p>\n

Terms to Know:<\/strong><\/p>\n