The document explains the concept of the current account and its significance in the balance of payments, specifically outlining the current account balance, components, and the implications of a deficit or surplus. It highlights causes of India's current account deficit, such as high consumption and low exports, and discusses the impact of this deficit on the economy, including slow growth and rising unemployment. Additionally, it notes that a current account deficit can have different effects depending on the country's development stage.

1. Current Account Deficit

2. Objectives
 To Know about Current Account
 Current Account Balance
 Deficit or Surplus in Current Account Balance
 Components of Current Account
 Current Account Deficit in India
 Causes Of Current Account Deficit
 Impact Of Current Account Deficit

3. Current Account

Current Account is a part of balance of payments.
 Current
account records transactions of
Goods,Services,Transfers,and Net income of a country with
the rest of the world.

4. Current Account Balance
 It
is difference between the receipts and payments on account of
current account which includes trade balance. There can be either
surplus or deficit balance in current account.
A
Current account Deficit takes Place when the Debits
(Payments) are more than the Credit(receipts).

A Current Account Surplus Takes Place When the Credits are
More than the Debits.

5. Current Account Deficit

Current account deficit occurs when a country’s total
imports are greater than the country’s total exports. This
situation makes a country a net debtor to the rest of the
world.
Total Import

Total Export
Current Account deficit are Usually Measured as a
Percentage of GDP.

6. Components Of Current
Account
1. Trade Balance or Balance of Trade.(A)
2. Earning From Investment.(B)
3. Direct Transfers.(C)

7. Current Account
1.Balance Of Trade (A)
 It
is the difference between the monetary value of exports
and imports of goods in an economy over a certain period
of time.
BOT = Exports- Imports

8. Current Account
2.Earnings From Investment (B)

Foreigners invest their money in India through FDI and FII.
Similarly, Indian’s also invest their money abroad. The
investors earn an income in the form of Interest,Dividend.etc

9. Current Account
3.Cash Transfers (C)

Cash transfer is the money that is transferred without any
exchange of goods or services. One-sided Receipts/Payments.
Current Account =A+B+C

11. Causes Of Current Account Deficit
in INDIA

High Consumption

Heavy Import Of Oil

Gold Imports

Low Exports

Decrease In FDI

Low Savings

Other non-essential imports

Natural Disasters/ Crisis

13. Impact Of Deficit

Slow Growth of Economy

Unemployment

High rate of Inflation

14. India’s Current Position
 Economic
growth of India has slowed to 5 per cent(4.8 %)
in 2012-13 against 6.2 per cent in the previous fiscal.
Government has taken measures, such as to hike gold import
duty to 10%,increasing Export, increasing capital flow in
the country,

15. 
Current Account deficit may not be always bad for an
economy, it may be good at the developing stages and bad
at the developed stage if it is in the long-run.

16. Thank you