Current Account

The current account measures the flow of goods, services, and investments into and out of the country. It represents a country’s foreign transactions and, like the capital account, is a component of a country’s Balance of Payments (BOP).

A nation’s current account maintains a record of the country’s transactions with other nations that includes net income, including interest and dividends, and transfers, like foreign aid.

It comprises of following components -

Visible trade - Export and import of goods,
Invisible trade - Export and import of services
Unilateral transfers
Investment - Income from factors such as land or foreign shares

Current Account Deficit

There is a deficit in the Current Account if the value of the goods and services imported exceeds the value of those exported. It is measured as a percentage of GDP, the formulae for calculating CAD is as follows

Current Account = Trade gap + Net current transfers + Net income abroad

Trade gap = Exports – Imports

A country with rising CAD shows that it has become uncompetitive, and investors may not be willing to invest there.
Current Account Deficit and Fiscal Deficit are together known as twin deficits and both often reinforce each other, i.e., a high fiscal deficit leads to higher CAD and vice versa.
For the fiscal year 2019-20, the current account deficit narrowed to 0.9% of the GDP, compared with 2.1% in FY2018-19.

Source: PIB

Join Our Telegram

India–Australia Economic Cooperation and Trade Agreem

India–Azerbaijan

05 Apr, 26
SHARE

A year after tensions arising from Operation Sindoor, India and Azerbaijan have taken steps to restore and normalise bilateral relations. The 6th round of Foreign Office Consultations, held in Baku, marked the first such engagement since 2022, signaling renewed diplomatic momentum. Recent Diplomatic Engagement During the consultations, bo

India–Australia Economic Cooperation and Trade Agreem

04 Apr, 26
SHARE

The India–Australia Economic Cooperation and Trade Agreement has completed four years since its signing. Both countries now aim to build on this progress through strengthened collaboration and ambitious targets, including reaching AUD 100 billion in bilateral trade by 2030. What is the India–Australia Economic Cooperation and Tra

ADR Report on Political Funding

03 Apr, 26
SHARE

A recent report by the Association for Democratic Reforms (ADR) analyses donations of ?20,000 or more declared to the Election Commission of India (ECI) by national political parties for FY 2024–25, highlighting transparency and accountability in political financing. Key Findings Massive Funding Surge Total donations to nationa

Maritime Chokepoints

03 Apr, 26
SHARE

Maritime chokepoints are narrow channels along global shipping routes where maritime traffic is concentrated. These points are geopolitically and economically critical, as they handle a large proportion of global trade, especially energy shipments. Current Relevance Over two-thirds of seaborne energy trade passes through a handful o

US-Israel-Iran War

01 Apr, 26
SHARE

Following the launch of Operation Epic Fury (U.S.) and Operation Roaring Lion (Israel), the geopolitical landscape has shifted fundamentally with the confirmed death of Iran’s Supreme Leader, Ayatollah Ali Khamenei.Iran retaliated through Operation True Promise 4, launching missile attacks against Israel and nearby Gulf states. The escala