Focus: GS-III Indian Economy, Economic Development, Prelims
Why in news?
India’s current account deficit almost got wiped out in the December quarter standing at just $1.4 billion due to lower trade deficit and a rise in net services receipts, according to data released by Reserve Bank of India on 12th March 2020.
Private transfer receipts, mainly representing remittances by Indians employed overseas, increased to $20.6 billion, up by 9% from their level a year ago. In the financial account, net foreign direct investment at $10.0 billion was higher than $7.3 billion in Q3 of 2018-19. Foreign portfolio investment recorded net inflow of $7.8 billion – as against an outflow of $2.1 billion in Q3 of 2018-19 – on account of net purchases in both the debt and equity market.
- A fiscal deficit is a shortfall in a government’s income compared with its spending. The government that has a fiscal deficit is spending beyond its means.
- A fiscal deficit is calculated as a percentage of gross domestic product (GDP), or simply as total dollars spent in excess of income.
- In either case, the income figure includes only taxes and other revenues and excludes money borrowed to make up the shortfall.
Current Account Deficit
- The current account deficit is a measurement of a country’s trade where the value of the goods and services it imports exceeds the value of the products it exports.
- The current account includes net income, such as interest and dividends, and transfers, such as foreign aid, although these components make up only a small percentage of the total current account.
- The current account represents a country’s foreign transactions and, like the capital account, is a component of a country’s balance of payments (BOP).