Balance of Payment
India's balance of payment may go into $45-50 bn deficit in FY23
India's balance of payment is expected to be in deficit by $45 -50 billion in FY23 but this deficit can be managed comfortably with foreign exchange reserves at a healthy $531 billion, according to a report in the media.
Assuming that there will be no further major shocks, the deficit in the Balance of Payment will remain in the range of $45 -50 billion, Economic Times reported citing an official aware of the matter.
The balance of payments (BoP) is the record of the transactions in goods, services, and assets between residents of a country, India in our case, with the rest of the world for a specified time period typically a year.
It has two heads, broadly, current account and capital account.
India's BoP stood at a surplus of $47.5 billion in FY22.
The finance ministry is working on the revised estimates ahead of the Budget.
The projected deficit is attributed to the current account deficit.
The report said citing the official that the current account deficit will be above 3 percent of GDP but below 3.5 percent. This deficit was 1.2 percent of GDP or $38.7 billion in FY22.
The International Monetary Fund (IMF) has calculated India's FY23 current account deficit at $121 billion or 3.5 percent of GDP.
"The rupee will be under some strain. However, by mid-December there will be more stability," the official said, the report added.
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