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WHAT IS CURRENT ACCOUNT DEFICIT (CAD)

Current Account Deficit (CAD) is the shortfall between the money received by selling products to other countries and the money spent to buy goods and services from other nations. If the value of goods and services we import exceeds the value of those we export, the country is said to be in a deficit, and the difference in the two values is CAD.
 
The current account includes net income, including interest and dividends, and transfers, like foreign aid.
 
India’s current account position is largely on the deficit side because of the country's dependence on oil imports. In the quarter ended September 2019, the country's CAD stood at $6.3 billion.
 
What is Current Account and how is it different from Balance of Trade?
 
For a clear understanding of CAD, it's essential to learn about the current account. Quite similar to the balance of trade, current account maintains a record of the country's transactions with other nations.
 
However, the two terms are technically different. While the balance of trade measures only the gap in earnings and expenditure on exports and imports of goods and services, current account also factors in payments from domestic capital deployed overseas.
 

Current Account Deficit (CAD)

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