Context:
The current account deficit of India in Q2 2024-25 declined to $11.2 billion, 1.2% of GDP.
Key Highlights:
- The trade deficit in merchandise increased to $75.3 billion from $64.5 billion in Q2 2023-24.
- Net invisibles receipts went up from $39.9 billion the previous year to $44.5 billion now.
- Net direct foreign investment suffered an outflow of $2.2 billion in Q2, below estimates.
Current Account Deficit
If an economy is running a current account deficit, it is absorbing (absorption = domestic consumption + investment + government spending) more than that it is producing. This situation can arise if some other economies are lending their savings to it (in the form of debt to or direct/ portfolio investment in the economy)
