New Delhi, July 14 (UNI) The expectation of the expansion of the cur- rent account deļ¬cit is not just driven by elevated global commodity prices, but is also linked to the unlocking of the econ- omy reviving pent-up demand and improved vaccination cover aid- ing an organic recovery in the economy, ratings and research ļ¬rm Acuite Ratings & Research said in a report.Nevertheless, there is considerable uncertainty in project- ing trade and current ac- count deļ¬cit due to high volatility in commodity prices, which in the current environment is tak- ing cues from unpredict- able geopolitical events.
“Given, the relentless rise in commodity prices particularly crude oil which has again risen to $120 per barrel, we project current account deļ¬cit (CAD) to widen to more than $90 bil- lion (in FY23) from an estimated $47 billion in FY22,” the report said. India’s merchandise trade deļ¬cit widened to a record high level of $23.3 billion in May 2022 from a deļ¬cit of $20.1 billion in April, the report said citing the Ministry of Commerce and Industry’s preliminary data. On the other hand, imports increased slightly to $60.6 bil- lion in May from $60.3 bil- lion in the previous month, given the rising crude oil bill.Notably, India’s share of oil imports from Russia has increased from 2 per cent to nearly 25 per cent since the onslaught of the geopolitical crisis, with India taking advantage of competitive pricing with an aim to fulļ¬l its heavy oil needs, it said.”On the exports front, the modera- tion was driven by non-oil exports while oil exports eased a tad in May-22. On a sectoral basis, com- modities such as petro- leum products, electronic goods, chemicals, and engineering goods remained strong in May-22.
“The re- port further said that the evolving global geopoliti- cal dynamics, and policy support through targeted incentive structures like the production-linked in- centive schemes and stra- tegic trade partnerships (such as India-Australia trade agreement, and In- dia-UAE trade pact) would also continue to support exports, besides the inor- ganic expansion via price effect. That said, some normalisation in growth is likely in the coming quar- ters on deceleration in global demand, the report added.