The current account deficit (CAD) will remain at a sustainable level and the normal flows will help the Reserve Bank of India (RBI) to finance it, Governor Shaktikanta Das said on Wednesday.
He also said the Indian economy is well placed to deal with geopolitical challenges.
"We expect the current account deficit to remain at sustainable level and the normal flows will enable us to meet the financing of the current account deficit," Das told reporters during the post-policy press conference.
The country's current account deficit increased to USD 23 billion, or 2.7 per cent of GDP, in the third quarter of FY 2021-22 from USD 9.9 billion or 1.3 per cent of GDP in the second quarter and USD 2.2 billion (0.3 per cent of GDP) in Q3 of fiscal 2020-21.
The widening of CAD in Q3 FY22 was mainly on account of higher trade deficit.
Das said there has been a rise in exports and imports.
"Higher exports are the good signs of the economy. Higher imports also augur well and it means that there is capital expenditure and investment which is taking place or is going to take place," the Governor said.
Talking about the Indian economy, he said the country is well placed to deal with the challenges emanating from the geopolitical developments.
"The recovery is gaining traction and it is reflected in the fact that capacity utilisation has improved. Disbursal of bank credit is also picking up. Rural and urban demand are showing signs of further improvement. Overall macroeconomic numbers broadly look alright," he noted.
Das also said the Indian rupee is one of the better performing currencies among its emerging market peers.
